Introduction

A research article represents the results arrived at after conducting the research, which includes data collection and analysis. From the article to the results and conclusion, the article structure has to be appealing and well presented for one to understand the steps followed and the results. For any research article, there has to be an abstract, introduction, literature review, methodology, results and discussion. All these steps have to be concise and clear and to the point. The methodology should have a clear explanation of the different steps taken in the collection and analysis of data and other involved activities. Data tabulation in tables and graphs has to be clear and concise. This paper seeks to review whether the article titled “Do key investor information documents enhance retail investors’ understanding of financial products? Empirical evidence” authored by “Oehler, A., Höfer, A. and Wendt, S” and published in the “Journal of Financial Regulation and Compliance” has followed the right structure and has represented the results clearly with credible references.

I choose this article because it is very representative of financial articles and it is worth reviewing to get informed about the structure and methodology of writing a financial article. The authors of the article follow through with their objective and aim. They seek to review the understanding of financial products information by retail investors through Key information Documents (KIDs). The authors present several facts and have managed to prove through data that retail investors assess KIDs appropriately to understand the key characteristics of the financial products. The appropriate assessment is, however, moderate (Oehler, Höfer, and Wendt, 2014 p1). The authors have fully delivered on what they set to discuss in the article. I will review this article in parts from the abstract to the conclusion and the references. Each part will be reviewed on its own, but a general structure part will be included to review the general structure of the article. Any identified gaps for further research has to be reviewed for viability.

General Structure

The general structure of the article is appropriate. The article has different sections including title, abstract, introduction, related research, methodology, results, discussion, and conclusion (Dine et al., 2015 p 19). Each item is explained in complete and grammatically correct sentences. Paragraphs are present to different ideas. Each paragraph brings in something new. The paragraphs are structured correctly and are spaced appropriately. Headings have been bolded to differentiate them from the rest of the work.

The paper has references, and in-text citations are included. There are footnotes in some instances explaining more about a point. A good example is a footnote on page 6 explaining more about the Standard portfolio theory. The tables appear in a separate section since some of them are large. However, there is a clear indication of where they should appear between the paragraphs. The conclusion of the article is a good representation of article and gives the major findings. A reference list has been included as the last part of the paper.

Article Title

The title of the article is representative of the article. It accurately describes what the article seeks to unravel, and one can clearly deduce the research question and the objective from the title. The language used in the article title is simple and clear, and there is no overutilization of technical terms. Anyone without the knowledge of finance can easily understand the title and the objectives the authors seek to meet.

Abstract

The abstract is a brief summary of an article. In the article under review, the abstract is representative in that it touches on all other areas giving the main points. Its structure does not show the different parts of the article rather the information appear chronologically in an essay form. This is consistent with financial articles where the abstract is not structured. The relevant keywords appear in the abstract with no repetition of phrases or keywords. In addition, the abstract is short which is consistent with the standards in financial articles.  From the introduction to the conclusion, the abstract touches on all the relevant information and findings.

Article Introduction

The article introduction is very informative unto the key objective of the article, which is to determine KIDs enable the retail investors to understand the financial products better. The information provided includes associated risk, benefits, costs, and the expected returns. KIDs are self-sufficient and explanatory to allow the investors to seize the relevant information in one document. Updating of the documents occurs regularly and they appear in non-technical language (Oehler, Höfer and Wendt, 2014 p 2). Thus, the authors of this article seek to determine whether these documents improve the understanding of financial products by the investors. The introduction includes information onto why the KIDs came to be and the different forms of KIDs.

Relevant information such as objectives and aims, problem statement and the research question are included in the introduction. The introduction informatively represents what the articles seek to deliver. It provides some background information about the several aspects in the article including KIDs and their relevance and origin. The authors have followed through in the introduction part of the article. Anyone reading the introduction can understand what KIDs are and how investors use them in decision-making. One can also understand why the KIDs were introduced and why they are relevant to investors. With that information, one is in a better position to understand the literature review and the data presented.

Literature review

This section is included as the related research section. This is the review of other researches done by other people related to the research question. The literature review section reviews all other researchers relevant to the research question (Rowley and Slack, 2004 p 32). In this article, the literature presented in very relevant. Comprehensive literature is reviewed showing results from other research studies in the financial field and why it is significant to conduct this particular research. The authors identify a gap through literature review to justify the relevance of their work. Generally, the literature review helps to demonstrate the identified gap justifying why the study is relevant.

KIDs are legislative procedures, which normally assume that consumers can handle any situation with the legal capacity and it is possible to provide the relevant information to make consumers rational in decision-making. However, investors like all other consumers in the market act in a competitive market. Economically, consumers will always maximize utility, which is what the legislations assume. However, consumers will not always seek to maximize utility. There are other hindrances such as incomplete processing of information and self-denial.

One of the studies reviewed in this section of the article is one by Simon (1955, 1956) which argues that consumers face cognitive constraints (Oehler, Höfer and Wendt, 2014 p5). Consumers are not machines to process much information in a short period. Individuals need time to process the information and make a rational decision. However, in investments, the market is very competitive and the same information is available to all people. The competitive factor gives an individual no time to process the information completely and make a rational decision. Most of the decision-making opportunities often lead to denial given that the utility of some product characteristics is not included in the determination of the product-purchasing price.

Another article reviewed one by Cole and Shastry (2009) which sought to determine whether there is a relationship between investor behavior and financial education (Oehler, Höfer and Wendt, 2014 p7). The authors concluded that there is little positive relationship between the two aspects. This raises the question of causality. It is ambiguous to argue that a higher financial know-how will result in superior decisions in investment. This is not true since there are questions into the impact of education on financial literacy. In addition, in an efficient market, all the information is available to all investors and the aspect of financial know-how, in this case, will not help one has an upper hand. With all these arguments, the authors of the article under review have identified a gap. Do the KIDs really help the investors to understand the financial products?

Methodology

In this article, Empirical analysis is used to evaluate the different forms of KIDs and determine whether they meet the minimum requirements to be able to benefit the consumers. Empirical evidence is information, whose acquisition follows experimentation or observations (Kothari, 2004 p 220). Data recording and analysis occurs for the generation of patterns and statistical models. The authors of this article collected data for three months in the year 2011 by conduct a survey among 230-post graduate and 44 graduate students (Oehler, Höfer, and Wendt, 2014 p7). The researcher used a standardized questionnaire to collect data. The sample included finance students given that they are specialists in finance and retail banking and are familiar with the products included in the study.

For seven times, three different KIDs were presented to the students for assessment. The assessment had its basis on structure and design, comparability, comprehensibleness and relative rank. There are some elements of descriptive research design in that most of the assessment elements cannot be quantified rather they can only be described. The article itself is Quantitative in nature in that information taken from structured questionnaires focus on the construction of statistical models to explain the results reached.

The sample used in the study is relevant since it includes financial students who are familiar with the products used in the study. The sample includes graduates and post-graduates to present the difference in financial education. Given that the students were expected to assess the products, it is significant for them to have had financial know how. However, it would have been better to include students who had no financial education to test the idea of a positive relationship between financial education and financial expertise. The median was used as the measure of aggregate value. To test the equality of the median values calculated, a U-test is conducted (Oehler, Höfer and Wendt, 2014 p 9). In general, the methodology used is very relevant.

Results and Discussion

In this article, the authors utilize the descriptive statistics in analyzing whether the KIDs are effective in enhancing the understanding of financial products by the investors. Data is presented by use of tables, which are labeled and presented in a separate section of the paper due to their nature. The tables are well organized and easy to understand. Relevant citations on the tables have been included where necessary. Data description is clear, accurate, and concise.

After describing the data, the authors discussed the implications of the results. In any study, the discussion has its basis on the results of the data. The discussion reveals that the assessment of KIDs by the investors is moderately appropriate in providing information about a specific financial product (Oehler, Höfer and Wendt, 2014 p11). The authors argue that retail investors with a lesser financial education and sophistication will not benefit from issuer/supplier KIDs. The authors go ahead to explain why this might be the case using approached in finance and economics.

Article Conclusion

The conclusion effectively makes a conclusive argument about the research objective and presents the major findings of the study. It gives explanations about why the findings turned up the way they did and identify gaps for future research. An example of a recommendation for future research is why the regulation concentrates on products purchase and neglect the sales decision (Oehler, Höfer and Wendt, 2014 p14). Elements such as interest rate, liquidity, and inflation, which are significant in making investment decisions, are not included in the KIDs.

References

The article has utilized different references, which appear at the last part of the article. The references represent other people’s ideas that appear in the article. In text, citations have been included for the references. The references are valid and appropriate in that they include articles and books referred to in the course of the study. Most of the references used are financial sources used in the literature review to analyze what others have done and identify a gap.

There are also references pertaining to decision-making since the article is dealing with some aspects of decision-making. All the references used are relevant to the question under study.

Further Comments

It is clear in the article that the authors achieved what they set out to do. They set out to unravel the mystery about KIDs and their relevance in informing the retail investors. They realized that KIDs are moderately appropriate in informing retail investors. This is because there are other factors playing behind the scenes except utility maximization. In addition, some KIDs require an investor with high financial education to be able to analyze. The article puts forward questions for further research. As far as this article is concerned, the authors fully achieved their objected and contributed to the scholarly world of finance.

Conclusion

It is agreeable that this article was a success. The authors set out to get some results, after outlining the methodology followed it, and ended up with some results. The results are tabulated in tables and relevant descriptions included. All through the paper, all the steps taken are included in the descriptions. The literature review section clearly identifies a gap justifying why it was necessary to conduct the study. The authors used a sample to represent the whole population and made a conclusion based on the sample. This is in line with research standards and methods since it is difficult to include the whole population in a study.

In conclusion, I think this is a well-structured article with the relevant topics and parts included. The general structure of research article writing is adhered. There are no mistakes grammatical or structural that would prevent one from understanding the content. The flow of the paper is concise and up to the standards. The necessary references have been included. In text, citations and end noted have been used to provide more information and to show whose ideas have been utilized in the article. The references used are if high quality since they include books and journal articles. There are no websites used such as Wikipedia whose validity is questionable. The article itself is very relevant to the financial world today in that when making investment decisions, investors depend on the information provided.

References

Dine, C.J., McGaghie, W.C., Bordage, G. and Shea, J.A., 2015. Problem Statement, Conceptual Framework, and Research Question. Review Criteria for Research Manuscripts, p.19.

Kothari, C., 2004. Research methodology. New Delhi: New Age International (P) Ltd.

Oehler, A., Höfer, A. and Wendt, S., 2014. Do key investor information documents enhance retail investors’ understanding of financial products? Empirical evidence. Journal of Financial Regulation and Compliance, 22(2), pp.115-127.

Rowley, J. and Slack, F., 2004. Conducting a literature review. Management Research News, 27(6), pp.31-39.

 
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