The Impact of Investor Status on Investors' Evaluation of Negative and Positive, Separate and Combined Information

Abstract

This paper examines the impact of investor status (current and prospective) on investors' evaluation of information varying in valence (positive and negative) and in presentation mode (simultaneous and sequential). MBA graduates, proxying for investors, rated the relevance of positive and negative company information and the attractiveness of the company as an investment. Results indicate that (1) current (but not prospective) investors' relevance and attractiveness ratings are more favorable when negative information is presented sequentially (compared to simultaneously) with other negative information; (2) investors' investment attractiveness ratings are more favorable when negative and positive information are simultaneously (compared to sequentially) presented; and (3) investors' relevance and investment attractiveness ratings are more favorable when positive information is presented sequentially (compared to simultaneously) with other positive information. These findings are generally consistent with the psychological phenomena of multiple loss aversion, loss buffering, and gain savoring, respectively.