Accounting Measurement Reliability and Investor Risk Perception

Abstract

This research introduces a novel, cross-disciplinary framework for analyzing the relationship between accounting measurement reliability and investor risk perception by integrating principles
from information theory, behavioral finance, and computational linguistics. Departing from
traditional archival methodologies that rely on historical market data and survey instruments,
we develop a quantum-inspired measurement model that conceptualizes accounting reliability
not as a static binary property but as a probabilistic wave function collapsing upon investor observation. Our methodology employs a three-phase approach: first, we apply natural language
processing algorithms to analyze the linguistic uncertainty embedded in financial statement
footnotes and management discussion; second, we construct a reliability entropy index quantifying the dispersion of possible measurement outcomes; third, we utilize agent-based simulation
to model how heterogeneous investors with varying cognitive architectures process this entropy
to form risk assessments. We test this framework using a unique dataset comprising 1,200
corporate financial reports from 1998 to 2004, manually annotated for measurement ambiguity. Our results reveal a non-linear, threshold-based relationship between measurement entropy
and perceived risk, contradicting the linear assumptions prevalent in existing literature. Specifically, we identify a ’reliability illusion zone’ where moderate increases in measurement ambiguity
paradoxically reduce risk perception for certain investor archetypes, a finding with significant
implications for financial regulation and disclosure standards. Furthermore, our computational
simulations demonstrate that market stability emerges not from uniform reliability, but from a
diversity of investor interpretation heuristics applied to imperfect measurements. This research
contributes original theoretical constructs—including the Quantum Reliability Collapse postulate and the Entropy-Risk Perception Nexus—while offering a novel methodological toolkit for
examining the cognitive intermediation of accounting information.