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

See all articles by W. Brooke Elliott

W. Brooke Elliott

University of Illinois at Urbana-Champaign

Brian Gale

University of Washington

Jessen L. Hobson

University of Illinois at Urbana-Champaign

Date Written: November 15, 2019

Abstract

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

Suggested Citation

Elliott, W. Brooke and Gale, Brian and Hobson, Jessen L., The Joint Influence of Information Push and Value Relevance on Investor Judgments and Market Efficiency (November 15, 2019). Available at SSRN: https://ssrn.com/abstract=3399252 or http://dx.doi.org/10.2139/ssrn.3399252

W. Brooke Elliott

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Brian Gale

University of Washington ( email )

Box 353200
Seattle, WA 91895
United States

Jessen L. Hobson (Contact Author)

University of Illinois at Urbana-Champaign ( email )

4011 Business Instructional Facility
515 East Gregory Drive
Champaign, IL 61820
United States

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