Journal article
Are Investors Warned by Disclosure of Conflicts of Interest? The Moderating Effect of Investment Horizon
Yuanyuan Liu, Zhongwei Huang, Like Jiang, William F Messier Jr.
The Accounting Review | American Accounting Association | Published : 2020
Abstract
Financial analysts are required to disclose conflicts of interest (COI) in their research reports, but there is limited evidence on the effectiveness of COI disclosures. We investigate whether the influence of disclosing COI in analyst reports on investors' decision making depends on investment horizon. Experimental results show that short-term investors who view a COI disclosure are significantly less willing to invest in the recommended stock compared to short-term investors who do not view such a disclosure, while the presence of a COI disclosure does not significantly affect long-term investors' willingness to invest. Results further demonstrate that the COI disclosure decreases short-te..
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Funding Acknowledgements
We thank Elaine G. Mauldin (editor), two anonymous reviewers, Eddy Cardinaels, Wei Chen, Anne Farrell, Jonathan Grenier, Jeffrey Hales, Erin Hamilton, Frank Hodge, Olivia Huseman, Jason Kuang, Nira Liberman, Aaron Saiewitz, Yaacov Trope, Martin Weisner, and Huaxiang Yin for their helpful comments and suggestions. Dr. Jiang received financial support for this research project from the Accounting Department, Faculty of Business and Economics, at The University of Melbourne. Dr. Liu acknowledges that this research project was supported by the National Natural Science Foundation of China [Grant No. 71702143]. Dr. Huang acknowledges financial support from the Cass Business School Pump Priming fund (90161BW). Professor Messier received financial support for this research from the Norwegian Institute of Public Accountants (DnR) Professorship in Auditing at NHH.