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How Does Investors’ Use of Search Engines Affect Their Investment Judgments?

Fri, October 12, 1:45 to 3:15pm, TBA

Abstract

This study investigates how accessing financial information via a search engine impacts investors’ information processing and investment judgments. By manipulating the perceived ease of information access through use of a search engine, I provide experimental evidence that investors are more likely to rely on information gist and use heuristics after googling to access a firm’s financial information. Results show that investors using a search engine to access a company’s financial information were more likely to invest in a company with a higher likelihood of real earnings management (REM) than a company with the same net income but a lower likelihood of REM. On the other hand, investors who did not use a search engine were more likely to invest in the company with the lower likelihood of REM. Furthermore, search engine condition investors judged the financial information as more easily available in the future, and retained less information about the company. Overall, my theory and findings contribute to the accounting literature by showing that using technologies that increase perceived ease of information access can change how investors process and acquire financial information. This study also contributes to the psychology literature by extending the previous literature on the effects of perceived ease of information access from memory to individuals’ judgments.

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