Numbers VS Narratives in the Eyes of Non-professional Investors

Abstract: Purpose: In an explorative manner this thesis aims to research how the content of CEO-statement affects non-professional investors’ opinion of a company’s prospects. Methodology: This study is to be considered a qualitative study based on an inductive orientation regarding the role of theory. A cross-sectional design has been followed for the gathering of empirical data. Semi-structured interviews have been conducted along with a self-completion questionnaire. Both methods are used under the overarching structure of a simulation enabling an equity assessment by non-professional investors. Theoretical Perspectives: Initially, accountancy as a communication process is used to provide a theoretical context for our empirical material. Furthermore, theories for message reception and processing in the form of attribution theory, cognitive dissonance theory and social judgement theory are used. These were used in order to understand non-professional investors’ interpretation, organisation, and judgment process regarding the financial statements and the CEO-statement. Also, the Narrative paradigm is used as a theory of narrative in order to understand the persuasiveness of the CEO-statement. Finally, the competing values framework of managerial communication is used as a theory for understanding characteristics of the CEO-statement. The mentioned theories are then summarised and merged into an analysis model. Empirical Foundation: The empirical material is collected via a structure of simulation for fifteen participants incorporating semi-structured interviews and self-completion questionnaires. Conclusions: The observations in this study imply that non-professional investors perceive more often than not that a dissonant CEO-statement in relation to the financial statements possess characteristics that alter their opinion. It is demonstrated that the characteristics of dissonance cause non-professional investors’ to either revise their opinion in a positive direction or not change it at all. Finally, it is concluded that the opinion of non-professional investors’ is affected by both perceived characteristics of dissonance and perceived persuasiveness of the CEO-statement.