This paper investigated the impact of financial and non-financial disclosure in investors’ information processing and judgment when provided with descriptive and indicative measures. This study is based on web questionnaires that includes one situated manipulation and three manipulated conditions. Situated manipulation is either short or long investment time horizon. Three manipulated conditions are on financial and nonfinancial disclosure components: positive versus negative ROEs, R&D expenditures to sales ratios, and employee turnover ratios.
This study first found that the participants were particularly concerned with information on employee turnover in the long-term investment horizon, while not in the short-term investment horizon. On the other hand, no significant signs were not found either in ROEs and R&D expenditures to sales ratios. Descriptive statistics showed, not significant, but consistent signs with our hypotheses on both ROEs and R&D expenditures to sales ratios. Therefore, further research with sufficient samples is needed.
This study second found a significant simple-simple main effect of employee turnover ratios for negative ROEs under negative R&D expenditures to sales ratios conditions. This result suggests that among participants provided with both negative ROE and negative R&D manipulations, positive employee turnover ratios positively affected corporation evaluation. This result further casts a fascinating insight into the usage of financial and non-financial measures. Participants who were provided both negative ROE and negative R&D manipulations might judge that this hypothetical company is under unfavorable and deteriorating business conditions. The investors might utilize non-financial information to a greater degree when the firm is under troublesome business conditions than when under normal or thriving business conditions, on corporate evaluation. This paper provides a new empirical design that examines whether there is any different usage of financial and non-financial measures between thriving business conditions or deteriorating business conditions.
Keywords：Integrated report, Non-financial information, ROEs, R&D expenditures to sales ratios, Employee turnover ratios, Long-term investment, Corporate evaluation, Main effects, Interaction effects, Business conditions