When and how do advertisements affect investors’ processing of online financial information?

Abstract

We conduct three experiments that examine when and how advertisements affect investors’ processing of financial information in an online environment. Our first experiment investigates the effects of peripheral advertisements with benign content. We do not observe differences in investment judgments when such ads are present, and a follow up eye tracking study confirms that investors generally avoid looking at these types of ads. Our second experiment investigates the effects of advertisements when they are more difficult to distinguish from relevant content. We find that investors’ efforts to avoid advertisements result in lower recall of graphically presented financial information when advertisements that interrupt the relevant content are present. Our third experiment investigates peripheral advertisements with content that elicits a negative emotional response and finds that these ads affect investment judgments via their effects on investor mood and the perceived tone of nearby financial information. Overall, our findings suggest that investors successfully ignore benign peripheral advertisements, but other types of advertisements, such as intrusive or emotionally laden advertisements, affect investors’ processing of nearby financial information.