Financial reporting and consumer behavior

S Noh, EC So, C Zhu - Jacobs Levy Equity Management Center for …, 2023 - papers.ssrn.com
Jacobs Levy Equity Management Center for Quantitative Financial …, 2023papers.ssrn.com
We show that financial reporting influences consumer behavior by showcasing firms' brand
names and financial information. Analyzing GPS data, we document upticks in foot-traffic to
firms' commercial locations immediately following their earnings announcements. This
increase is more pronounced for announcements with substantial media attention, fewer
concurrent announcements, heightened internet search volume, and extreme stock price
jumps and earnings surprises—indicating that announcement coverage impacts consumer …
Abstract
We show that financial reporting influences consumer behavior by showcasing firms’ brand names and financial information. Analyzing GPS data, we document upticks in foot-traffic to firms’ commercial locations immediately following their earnings announcements. This increase is more pronounced for announcements with substantial media attention, fewer concurrent announcements, heightened internet search volume, and extreme stock price jumps and earnings surprises—indicating that announcement coverage impacts consumer behavior by capturing attention. Furthermore, foot-traffic increases with positive earnings for firms offering durable goods, suggesting consumers respond to news about firms’ financial prospects. Consumer attention patterns generate feedback effects on advertising effectiveness and revenues, ultimately suggesting that financial reporting serves a marketing function.
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