Presentation and Communication of Financial Information for Investment Decision: Synthesis of the Literature

Abstract

The focus of investment failure is seen as consequential to investors’ irrational decision. Capital structure and classical theories, by literature, informed the investor in making their portfolio choices. Currently behavioural finance positslack of cognitive and psychological capacity of the investor in the use of complex information to make a rational investment decision. The rationality of information, how presented and communicated by management is not on the radar of experts and analysts. Literature is reviewed, addressing the presentation and communication of financial information in proactive market orientation for rational investment decision.The studyposits the relevance of communicating financial information in proactive market orientation as againstthe linearone‐step modelapproach. Management should be responsible for any investment and corporate failure dependent on relevant financial information and how rationally communicated. Capital structure is a response of investors to management behaviour and not management choice.