Voluntary and Mandatory Disclosures—The Effects of Voluntary Disclosure Medium on Information Search and Investor Judgments

ABSTRACT In two experiments, we demonstrate that the communication medium of voluntary disclosures can influence investors’ information search decisions, which can affect their attention to mandatory disclosures. In an information search setting relating to an investor relations website, our experiments manipulate the format of voluntary disclosure (text or video) and the valence of the information (positive or negative) contained in mandatory disclosures. Our results indicate that investors are more likely to search for voluntary disclosures when they are in a video format. A significant interaction emerges where the news valence in mandatory disclosures is less influential on investors’ judgments when voluntary disclosures employ a video format compared with a text format. This demonstrates that the communication medium of voluntary disclosures can influence investors’ attention to and their processing of mandatory disclosures. Our study contributes to the literature on financial disclosure, disclosure characteristics, and investor behavior. Data Availability: Data are available from the authors upon request.