When and how do advertisements affect investors’ processing of online financial information?

43 Pages Posted: 22 Mar 2021

See all articles by Nicole L. Cade

Nicole L. Cade

University of Pittsburgh - Accounting Group

Molly Mercer

DePaul University

Amanda Winn

University of Kansas

Date Written: March 19, 2021

Abstract

We conduct three experiments that examine when and how advertisements affect investors’ processing of financial information in an online environment. Our first experiment investigates the effects of peripheral advertisements with benign content. We do not observe differences in investment judgments when such ads are present, and a follow up eye tracking study confirms that investors generally avoid looking at these types of ads. Our second experiment investigates the effects of advertisements when they are more difficult to distinguish from relevant content. We find that investors’ efforts to avoid advertisements result in lower recall of graphically presented financial information when advertisements that interrupt the relevant content are present. Our third experiment investigates peripheral advertisements with content that elicits a negative emotional response and finds that these ads affect investment judgments via their effects on investor mood and the perceived tone of nearby financial information. Overall, our findings suggest that investors successfully ignore benign peripheral advertisements, but other types of advertisements, such as intrusive or emotionally laden advertisements, affect investors’ processing of nearby financial information.

Keywords: investor behavior, online financial information, advertisements

Suggested Citation

Cade, Nicole L. and Mercer, Molly and Winn, Amanda, When and how do advertisements affect investors’ processing of online financial information? (March 19, 2021). Available at SSRN: https://ssrn.com/abstract=3808150 or http://dx.doi.org/10.2139/ssrn.3808150

Nicole L. Cade (Contact Author)

University of Pittsburgh - Accounting Group ( email )

United States

Molly Mercer

DePaul University ( email )

1 E Jackson Blvd Suite 6000
Chicago, IL 60604
United States
(312)362-8956 (Phone)

Amanda Winn

University of Kansas

1415
Lawrence, KS 66045
United States

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