The effect of boilerplate language on nonprofessional investors’ judgments

Ozlem Arikan

Research output: Contribution to journalArticlepeer-review


Most companies disclose risk factors using vague, boilerplate language. Regulators are concerned that this vagueness reduces the decision-usefulness of the information; hence, they are encouraging companies to be more specific rather than generic. However, little is known about the impact of specificity on investment judgments. The results of this experimental study suggest that regulators’ concern may be justified. Non-professional investors who read a generic disclosure react less strongly immediately after reading it than those who read a more specific disclosure when prior information about the disclosed risk factor is available in their memory immediately before reading the risk disclosure. In addition, on realisation of the risk, they are more surprised than their counterparts who read a more specific disclosure, and lower their credibility judgments accordingly. These investors correct their judgments after the risk realisation to a greater extent than those who have read a more specific disclosure. The study has implications for regulators, managers, non-professional investors and researchers.
Original languageEnglish
JournalAccounting and Business Research
Early online date16 Aug 2021
Publication statusE-pub ahead of print - 16 Aug 2021

Bibliographical note

© 2021 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


  • risk disclosures
  • non-professional investors
  • specificity
  • investor judgment and decision making
  • experimental accounting


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