While navigating the web, how many times have you agreed to a particular site's terms by clicking a box marked "ok" or "I understand" without really reading the terms that you're agreeing to?
Doing so is apparently common enough to prompt the National Association of Securities Dealers Foundation to award a UConn communication sciences professor a grant to research how many people actually read the terms and conditions on investment company web sites and how to best inform online investors about the necessity of reading the fine print.
"I feel this is extremely important to investors and companies, since this is going to be our chance to educate online investors as well as investment companies," says Alex Wang, an assistant professor of communication sciences, who
is the principal investigator on the $112,000 grant.
"There is a great need for the information presented to consumers to be disclosed in an effective way," he says, "to help them make better decisions in terms
Wang says he will conduct the research through a web site that investors can access in a lab on campus, enabling him to see how they move through the site and what information they access.
The research aims to address several questions:
- When is disclosure information that is delivered online most effective?
- Can disclosure information to investors be improved?
- What will enhance investors' comprehension and retention of disclosure information, and thereby improve their investment decision-making?
- What modes of online disclosure information work best in making novice and expert investors more effective in their investment decision-making?
Alex Wang, assistant professor of communication sciences.
|Photo by Peter Morenus
Wang notes that published reports indicate the bulk of those making trades online are investors in their late 20s to mid-40s, and that there is a new boom in online investing among people who are 25 and younger.
He will focus his research on this group and test the effectiveness of online disclosure information by studying representative online investors with a range of expertise.
Wang says the research will actually benefit both investors and investment companies.
"Investors will be happier and companies will be more socially responsible due to the enhanced disclosure, and both will do better," he says.
"Research has revealed that companies perceived by consumers as socially responsible benefit in the long run, as it lends credibility and trust to consumers' attitudes toward the companies."
Wang expects to complete the research by next summer.