Data Overload and Investor Trading
Open Access
- Author:
- Miller, Brian Paul
- Graduate Program:
- Business Administration
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- June 23, 2008
- Committee Members:
- Paul David Fischer, Committee Chair/Co-Chair
Karl A Muller Iii, Committee Chair/Co-Chair
Andrew J Leone, Committee Member
Arun Upneja, Committee Member - Keywords:
- Data Overload
Small Investor Trading
Information Processing
Readability - Abstract:
- This paper examines the effects of annual report length and readability on small and large investors’ trading behavior. Motivated by critics concerns over the effects of longer and more opaque annual reports, I use computational linguistic software to measure the length (number of words) and readability (Fog Index and Plain English Index) of 10-K filings. After controlling for the information content of the report, I find evidence that small investors reduce their trading when filings increase in length. Additional analysis indicates that longer reports are also associated with reduced consensus and short-term trading profits for small investors. I fail to find similar evidence for large investors, which is consistent with their superior processing skills. Further, despite the SEC’s efforts to encourage plain English disclosure, I find little support that readability has an effect on investors’ trading behavior.