This paper investigated the impact of financial and non-financial disclosure on investors’ information processing and judgment when provided with qualitative and quantitative elements of information. This study is based on an online questionnaire survey that includes one situated manipulation and three manipulated conditions. Situated manipulation is either a short or long investment time horizon. Three manipulated conditions are on financial and non-financial disclosure components: positive versus negative ROEs, R&D expenditures to sales ratios, and employee turnover ratios.
This study first found that the participants were mainly concerned with information on employee turnover ratios in the long-term investment horizon. This result supports the meaningful role of non-financial measures in evaluating corporations over a long-time horizon. This study second found that the low employee turnover ratios positively affected corporation evaluation when participants provided with both negative ROE and negative R&D manipulations, regardless of short-or long-term investment time horizons. Participants who were provided negative financial measures might judge the company was under unfavorable and deteriorating business conditions in the first information processing procedure; hence, they use non-financial information in evaluating the company in the second processing procedure. This result supports the focus on non-financial disclosures from governmental and private organizations with the advent of the financial crisis in 2008.