MIAMI, Aug. 24 (UPI) -- Investors, even experienced ones, place a higher value on firms with attractive annual reports than on firms with less attractive reports, U.S. researchers say.
Claudia Townsend of the University of Miami School of Business Administration and Suzanne Shu of the UCLA Anderson School of Management conducted three studies -- one with finance students, one with members of the general population and one with more experienced investors.
Respondents in all three studies indicated that the design of a firm's annual report would be of little significance in their valuation of a company.
However, after reviewing the first few pages and/or a sampling of annual reports, participants rated firms with more attractive reports higher than those with less attractive reports, the researchers say.
"Better-looking documents produce increased pride of ownership for a company and this pride increases valuation," Townsend says in a statement.
The students priced the stock shares of a firm with the more attractive annual report nearly 70 percent higher than shares of a firm with the less attractive report. In the general population study, respondents gave the product of a company with a more attractive annual report an average rating of 5.08 on a seven-point scale vs. a rating of 4.79 for the product of a company with a less attractive annual report.
In the study involving experienced investors, the findings suggest including an additional color throughout a firm's annual report would have the same impact on an investor's firm ranking as a 20 percent improvement in revenue from the previous year, the study says.