Do Images Provide Relevant Information to Investors? An Exploratory Study

53 Pages Posted: 8 Nov 2021 Last revised: 22 Nov 2021

See all articles by Azi Ben-Rephael

Azi Ben-Rephael

Rutgers Business School - Rutgers University

Joshua Ronen

New York University (NYU) - Department of Accounting

Tavy Ronen

Rutgers Business School -Newark and New Brunswick, Department of Finance & Economics

Mi Zhou

Virginia Commonwealth University

Date Written: November 18, 2021

Abstract

We introduce the concept of "visual-readability" in annual reports and use novel machine-learning algorithms to construct visual-readability metrics: visual use and information-content-reinforcement (the degree to which information content in images reinforces text). We find that increased news coverage and asset growth are associated with increased visual use. In turn, increased visual use is associated with subsequent-year realizations: lower risk and cost-of-capital, increased institutional holdings, and higher bond ratings, market share, and ROA. Further, the degree of information-content-reinforcement is associated with subsequent lower analyst disagreement and greater forecast accuracy. By and large, our results are consistent with an information-based story.

Keywords: Visual readability, visual attention, visual sentiment, annual reports, images, information reinforcement, analyst forecast accuracy.

JEL Classification: D83, G12, G14, M41

Suggested Citation

Ben-Rephael, Azi and Ronen, Joshua and Ronen, Tavy and Zhou, Mi, Do Images Provide Relevant Information to Investors? An Exploratory Study (November 18, 2021). Available at SSRN: https://ssrn.com/abstract=3954219 or http://dx.doi.org/10.2139/ssrn.3954219

Azi Ben-Rephael (Contact Author)

Rutgers Business School - Rutgers University ( email )

HOME PAGE: http://https://sites.google.com/site/abenreph

Joshua Ronen

New York University (NYU) - Department of Accounting ( email )

40 West 4th Street, Suite 400
Suite 10-180
New York, NY 10012-1118
United States
212-998-4144 (Phone)
212-995-4599 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~jronen/

Tavy Ronen

Rutgers Business School -Newark and New Brunswick, Department of Finance & Economics ( email )

1 Washington Park
Newark, NJ 07102
United States
973-353-5272 (Phone)

HOME PAGE: http://https://www.business.rutgers.edu/faculty/tavy-ronen

Mi Zhou

Virginia Commonwealth University ( email )

301 West Main Street
Richmond, VA 23284
United States

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