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 wellbeing. It proposes a model exploring the mediating roles of the investor's financial risk tolerance and self-efficacy in the relationship between a firm’s information transparency and the consumer’s perceived financial well-being. 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’ perceived financial well-being. Information transparency also positively affects investors’ risk tolerance toward the firm and their financial self-efficacy while dealing with financial challenges. Limitations/Implications: The findings call for a deeper understanding of financial services’ interventions, and their underlying mechanisms to improve consumer financial well-being. On a methodological level, future studies could apply a mixed-method approach and SEM to explore new avenues for predicting investors’ financial well-being. Practical Implications: Besides validating TSR, the study have several implications for listed firms to adopt more transparent information reporting practices to improve investors’ perceived financial well-being. 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’ perceived financial well-being via information transparency.