The Asymmetric Reflection of Credibility: An Experimental Investigation of Disclosure Type, Framing, and Investor Judgment

This study investigates how the interplay between the nature of a corporate disclosure and its framing influences investor judgment. We conduct a 2x2 between-subjects experiment (N＝320) manipulating Disclosure Type (Financial Restatement vs. Voluntary ESG Assurance) and Disclosure Framing (Gain vs. Loss) to examine their effects on willingness to invest. We hypothesize an interaction whereby the negative impact of a loss-framed restatement will be significantly greater in magnitude than the positive impact of a gain-framed ESG assurance, an effect we term the “asymmetric reflection of credibility.” Our ANOVA results support this hypothesis, revealing a significant interaction effect. Furthermore, we test a dual mediation model and find that the effects of these disclosures on investment decisions are partially and asymmetrically mediated. Perceived legitimacy is the dominant mediator for financial restatements, while perceived information asymmetry is the primary mediator for ESG assurance. This research contributes to the literature by integrating prospect theory and legitimacy theory into a unified framework, demonstrating that the psychological impact of framing is contingent upon the disclosure’s role in shaping a firm’s social legitimacy. Our findings offer critical insights for managers on disclosure strategy and for investors on the cognitive biases affecting their evaluation of corporate news.