The Joint Influence of Information Push and Value Relevance on Investor Judgments and Market Efficiency
48 Pages Posted: 16 Jun 2019 Last revised: 2 Dec 2019
Date Written: November 15, 2019
We use experimental markets to examine how pushing investment information and the value relevance of that information interact to influence investors’ value estimate accuracy and market price efficiency. Developments in technology allow information to be pushed to investors anytime and anywhere. However, in addition to value-relevant information, pushed information often includes information that is irrelevant for assessing firm value. Drawing on psychology theory, we find pushing information has divergent effects depending on the value relevance of the information. Pushing only value-relevant information increases investors’ reliance on the information and leads to more accurate value estimates and market prices than when not pushed. In contrast, pushing a mix of value-relevant and value-irrelevant information reduces investors’ reliance on value-relevant information, leading to less accurate value estimates and market prices than when not pushed. Collectively, our results reveal a dark side to push technologies, particularly with the growing presence of value-irrelevant information.
Keywords: information push, value relevance, value estimate accuracy, market price efficiency
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