Beyond information: Disclosure, distracted attention, and investor behavior

Financial disclosure documents provide investors with product details to facilitate informed investment decisions. We investigate whether the appearance - the visual frame - of disclosure documents impacts risk and return expectations and investment behavior. In our experiment, subjects decide about investments into real-life mutual funds. We find that subjects expect a smaller return variance, invest more and gather less correct information if visual distractors are present in the visual frame. Distracted attention is one potential explanation of our results suggesting that disclosure policies should take the visual frame into account.