The Primacy Effect Impact of Information’s Order on Investors’ Perception

International Journal of Research in Commerce & Management, 5(6) (2014)

3 Pages Posted: 7 Jun 2019

See all articles by Dr. Divyang Joshi

Dr. Divyang Joshi

Parul Institute of Management and Research, Parul University

Date Written: June 6, 2014

Abstract

The annual report is the way to communicate about the business position to the stakeholders. The annual reports provide meaningful information regarding historical performance and prospective future opportunities. The president’s letter or director's report is a report submitted by the directors of a company to its shareholders, appraising them of the performance of the company under its direction. It is an exercise of self-evaluation. The letter mainly summaries company’s performance and the financial results, discusses company's plans for expansion, diversification or modernization, tells about appropriation of profits, and elaborates company's future prospects and plans for investments. Apart from mandatory disclosure for annual reports to shareholders, it is used as marketing tools which is used to focus the firm’s mission, objectives, strategies, and financial performance. The content of the letter is very important because it catch the attention of the readers like shareholders, investors, analysts, suppliers, government, banks, financial institutions etc. That is why it is very important to take care about the information, positive or negative, convey in presidents’ letter. This paper tried to examine the impact of ordering (Primacy and Recency effect) of the positive and negative information in the president’s letter on readers’ perception. The study concludes that the Primacy Effect can be observed due to change in
information’s order.

Keywords: primacy effect, recency effect, information order, chi square test

JEL Classification: G02

Suggested Citation

Joshi, Dr. Divyang, The Primacy Effect Impact of Information’s Order on Investors’ Perception (June 6, 2014). International Journal of Research in Commerce & Management, 5(6) (2014). Available at SSRN: https://ssrn.com/abstract=3392295

Dr. Divyang Joshi (Contact Author)

Parul Institute of Management and Research, Parul University ( email )

14 C SHIVAM TENEMENTS
OPP GOVARDHAN TWONSHIP GATE 2
BARODA, 390019
India

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