How Do Disclosure Repetition and Interactivity Influence Investors' Judgments?

Recent regulatory amendments aimed at modernizing disclosures and enhancing their usefulness focus on repetition and interactivity within firms' disclosure filings. We use two experiments to provide evidence on the effects of disclosure repetition (repeating of information in the filing) and disclosure interactivity (user involvement in directing the form or content of the information displayed) on investors' information processing and investment judgments. Results show that repetition increases investors' processing of repeated information, consistent with the informational role of repetition documented in prior research. In contrast, repetition reduces investors' processing of other, nonrepeated information when the filing is less interactive. This evidence corroborates concerns that repetition can obscure value-relevant information from investors. However, we find that more interactive disclosures mitigate this harmful effect of repetition on investors' processing of nonrepeated information. Further, more interactive disclosures lead to deeper overall processing of both repeated and nonrepeated information, rather than more interactive disclosures redirecting investors' attention and processing away from repeated information. Thus, our evidence suggests that disclosure interactivity is an important disclosure attribute that counteracts the potentially harmful effects of repetition on investors' processing of nonrepeated information, while preserving repetition's informational role.