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BUSI701 Week 2 Reply Reeve
Advanced Business Research Methods (Liberty
University)
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Behavioral Finance
Desmond Reeves
Hello John,
I am impressed by your opening statement that is clear and straight to the point about
what the article would is about. The disposition effect is something that needs to be looked at in
a bid to create equality with regards to the trading of capital assets. I also agree with your well-
compounded argument that the disposition effect is significantly influenced by the knowledge
that people have about the financial performance of a company. Information is powerful and
important. If people are more informed about the financial performances of firms, they would be
able to make sound financial decisions when purchasing stocks. The arguments laid out in the
study are organized and follow a clear flow that is well understood without any ambiguity. On
top of that, there are no grammar mistakes, and the formatting standards are well done, according
to APA. However, explaining the effects of financial transparency through reporting would
perhaps encourage firms to be more open in a bid to improve its stock performance. Adding
information about the impact of financial reporting and disclosure on stock performance would
help your article stand out even more and explain the second paragraph in greater depth.
According to Roychowdhury, Shorff, and Verdi (2019), good investment decisions are
enhanced by financial reporting and disclosure. When firms provide information about their
financial performance to the public, they cultivate a culture of trust where the latter will perceive
the business as being transparent in its operations. Good financial practices that adhere to
reporting standards help to build strong reputations that would attract investors and make the
business more productive. In turn, stock prices would increase since stockholders would benefit
from increased profitability. Through this, the disposition effect would be reduced as individuals
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will be enabled to make informed investment decisions. Nonetheless, the article is exciting and
interesting to read with well-supported arguments and an excellent flow of ideas.
Reference
Roychowdhury, S., Shroff, N., & Verdi, R. S. (2019). The effects of financial reporting and
disclosure on corporate investment: A review. Journal of Accounting and
Economics , 68 (2-3), 101246
