Financial Reporting and Consumer Behavior

46 Pages Posted: 28 Sep 2021 Last revised: 2 May 2022

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: September 28, 2021

Abstract

We find that financial reporting spurs consumer behavior. Using granular GPS data, we find that foot-traffic to firms’ commerce locations significantly increases in the days following their earnings announcements. Foot-traffic increases more for announcements with extreme earnings surprises, that correspond to firms’ fiscal year-ends, that occur outside of Fridays, and that elicit greater internet search volume, consistent with earnings announcements spurring consumer behavior by garnering attention. Foot-traffic also rises with positive earnings surprises among firms selling durable goods, consistent with consumers responding to information about longevity conveyed by some firms’ earnings news. Using demographic information, we find financial reporting disproportionately affects foot-traffic in populations more likely to consume financial news. Collectively, these results suggest that earnings announcements serve a marketing function by drawing attention to and providing information about firms, and that a byproduct of the financial reporting process is that it shapes consumer behavior.

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 (September 28, 2021). 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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