The transformative role of firm information transparency in triggering retail investor's perceived financial well-being

Abstract

Purpose

Based on transformative service research (TSR), the study explores the mechanisms by which a firm's information transparency influences a retail investor's perceived financial well-being (PFW). It proposes a model exploring the mediating roles of the investor's financial risk tolerance (RT) and financial self-efficacy (FSE) in the relationship between a firm's information transparency and the consumer's PFW.

Design/methodology/approach

A survey was conducted by including a sample of 310 retail investors from Pakistan Stock Exchange (PSX) to test the proposed hypotheses. Data analysis was based on a series of multiple regressions, moderation and serial mediation analyses.

Findings

The findings show that a firm's information transparency harnesses investors' PFW. Information transparency also positively affects investors' RT toward the firm and their FSE while dealing with financial challenges.

Research limitations/implications

The findings call for a deeper understanding of financial services' interventions and their underlying mechanisms to improve consumer’s financial well-being (FWB). On a methodology level, future studies could apply a mixed-method approach and SEM to explore new avenues for predicting investors' FWB.

Practical implications

Besides validating TSR, the study has several implications for listed firms to adopt more transparent information reporting practices to improve investors' PFW. Accordingly, regulators should take initiatives to compel firms to comply with higher standards of information transparency.

Originality/value

The proposed model explores a concrete mechanism that helps listed firms to strengthen investors' PFW via information transparency.

Citation

Naveed, M., Farah, M.F. and Hasni, M.J.S. (2021), "The transformative role of firm information transparency in triggering retail investor's perceived financial well-being", International Journal of Bank Marketing, Vol. 39 No. 7, pp. 1091-1113. https://doi.org/10.1108/IJBM-02-2021-0068