Seeing is Believing: Annual Report "Graphicity" and Stock Returns

76 Pages Posted: 29 Dec 2020 Last revised: 29 Sep 2023

See all articles by Wesley Deng

Wesley Deng

University of New South Wales - UNSW Business School

Lei Gao

George Mason University

Bo Hu

George Mason University

Guofu Zhou

Washington University in St. Louis - John M. Olin Business School

Date Written: September 1, 2023

Abstract

Why do firms graphically enhance their annual reports that appear redundant to the 10-Ks? We develop a novel rational model to explain this. Using a large dataset, we report the first evidence that firms earn approximately 3.5% abnormal returns in the next 3 to 6 months after they initiate graphic annual reports. This is accompanied by an increase in institutional investors' holdings, consistent with our theory that firms create visuals to overcome investor inattention and help communicate subtle information to fundamental investors. This is also consistent with the fact that such firms tend to increase their R&D investments afterwards.

Keywords: Graphic Annual Reports, Images, Graph, Visual, Attention, Fundamental Strategy, Anomaly, Big Data

JEL Classification: G02, G11, G12, G14

Suggested Citation

Deng, Xiaohu and Gao, Lei and Hu, Bo and Zhou, Guofu, Seeing is Believing: Annual Report "Graphicity" and Stock Returns (September 1, 2023). Available at SSRN: https://ssrn.com/abstract=3723126 or http://dx.doi.org/10.2139/ssrn.3723126

Xiaohu Deng

University of New South Wales - UNSW Business School ( email )

Sydney, NSW 2052
Australia

HOME PAGE: http://wesleydeng.net

Lei Gao

George Mason University ( email )

Fairfax, VA 22030
United States

HOME PAGE: http://sites.google.com/view/lei-gao/home

Bo Hu

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://sites.google.com/view/bohuhome

Guofu Zhou (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

Washington University
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-6384 (Phone)
314-658-6359 (Fax)

HOME PAGE: http://apps.olin.wustl.edu/faculty/zhou/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
784
Abstract Views
2,791
Rank
60,702
PlumX Metrics