Financial Reporting and Consumer Behavior

59 Pages Posted: 28 Sep 2021 Last revised: 20 Feb 2024

See all articles by Suzie Noh

Suzie Noh

Stanford Graduate School of Business

Eric C. So

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

Christina Zhu

University of Pennsylvania - The Wharton School

Date Written: February 18, 2024

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 substantial media attention, fewer concurrent announcements, heightened internet search volume, and extreme stock price jumps and earnings surprises—indicating that announcement coverage impacts 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. Consumer attention patterns generate feedback effects on advertising effectiveness and revenues, ultimately suggesting that financial reporting serves a marketing function.

Keywords: financial reporting, earnings announcements, media, 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 (February 18, 2024). Jacobs Levy Equity Management Center for Quantitative Financial Research Paper, 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

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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