Date of Award

2024

Document Type

Dissertation

Degree Name

PhD in Accountancy

Department

Department of Accountancy

First Advisor

Shankar Venkataraman

Second Advisor

Flora Zhou

Third Advisor

Kathy Rupar

Abstract

This dissertation examines how retail investors interact with three different financial market intermediaries – online stock brokerages, financial analysts, and auditors.

The first paper explores how trading restrictions impact retail investor perceptions of the brokerage that imposed the restriction contingent on the subsequent price trajectory of the stock. We find that when stock prices increase following a restriction (a non-gain), participants are more likely to react negatively to the brokerage than when stock prices decrease (a non-loss). This relationship is moderated by participants’ level of I-FoMO – or fear of missing out on investment information. These findings provide practical insight into how non-gains and non-losses can impact investor perceptions of trading restrictions. We also provide theoretical insight into the relatively new construct of I-FoMO.

The second paper examines retail investors’ assessment of the credibility of financial analysts based on characteristics of the analyst’s outputs (recommendations and earnings estimates) and financial relationship with the firm they cover. We find that in most cases directionally inconsistent revisions (e.g., a recommendation upgrade and decrease to earnings estimates) decrease investor perceptions of analyst credibility. However, when ulterior motives of the analyst are salient (i.e., the analyst is affiliated and provides an upward recommendation revision) the impact of an inconsistent revision on perceptions of analyst credibility is mitigated. We provide initial experimental evidence related to investor perceptions of inconsistent analyst revisions.

The third paper details how investors assess the credibility of greenhouse gas (GHG) emission auditors contingent on GHG performance and whether the GHG auditor concurrently audits the financial statements. I find that when GHG auditors concurrently audit the financial statements they are viewed as less credible than when they do not audit the financial statements. Additionally, when GHG performance is favorable, investors are more willing to invest in the company. The results should be of interest to the SEC as it provides initial evidence concerning how investors view the credibility of GHG auditors when they have multiple financial relationships with the firms they audit.

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