Individual investors and financial disclosure

Highlights • The study shows that, on average, individuals invest more in firms with clear and concise financial disclosures. • Relation is less pronounced for high frequency trading and financially-literate investors. • Individuals' returns are increasing with clearer and more concise disclosures. • Improved corporate disclosure practices benefit individual investors, in particular buy-and-hold investors. Abstract Using detailed data of individual investors, this study shows that, on average, individuals invest more in firms with clear and concise financial disclosures. The results indicate this relation is less pronounced for high frequency trading and financially-literate individuals. The study also shows that individuals' returns are increasing with clearer and more concise disclosures, implying such disclosures reduce individuals' relative information disadvantage. Together, the findings suggest improved corporate disclosure practices benefit individual investors, in particular buy-and-hold investors.

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Journal of Accounting & Economics

The Journal of Accounting and Economics is a peer-reviewed academic journal focusing on the fields of accounting and economics.

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