Financial Reporting and Consumer Behavior

52 Pages Posted: 28 Sep 2021 Last revised: 17 May 2023

See all articles by Suzie Noh

Suzie Noh

Stanford Graduate School of Business; Massachusetts Institute of Technology (MIT) - Sloan School of Management

Eric C. So

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Christina Zhu

University of Pennsylvania - The Wharton School

Date Written: May 15, 2023

Abstract

We show that financial reporting influences consumer behavior by showcasing firms’ brand names and financial information. Analyzing GPS data, we document upticks in foot-traffic to firms’ commercial locations immediately following their earnings announcements. This increase is more pronounced for announcements with extreme surprises, substantial media coverage, and heightened internet search volume—implying that announcement coverage drives consumer behavior by capturing attention. Furthermore, foot-traffic increases with positive earnings for firms offering durable goods, suggesting consumers respond to news about firms’ financial prospects. These patterns generate feedback effects on revenue and advertising effectiveness, ultimately suggesting that financial reporting serves a marketing function.

Keywords: financial reporting, earnings announcement, consumers, limited attention, consumer demographics, earnings surprise, big data

JEL Classification: G10, G11, G12, G14, G40, G41

Suggested Citation

Noh, Suzie and So, Eric C. and Zhu, Christina, Financial Reporting and Consumer Behavior (May 15, 2023). Available at SSRN: https://ssrn.com/abstract=3932590 or http://dx.doi.org/10.2139/ssrn.3932590

Suzie Noh (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave.
Cambridge, MA 02142
United States

Eric C. So

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Christina Zhu

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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