Abstract

Financial reporting standards aim to increase transparency; however, the expansion in disclosure volume may also create an information overload paradox for investors, an issue that remains underexplored in the context of institutional investors. Excess information beyond mandatory requirements may complicate decision environments and create cognitive burden. When information exceeds cognitive processing capacities, attention may become fragmented, making it more difficult to distinguish signal from noise and potentially leading to analysis paralysis and changes in risk perception. Drawing on bounded rationality and cognitive load theory, this study conceptualizes information overload as a behavioral constraint associated with perceived limitations in decision quality and speed and, accordingly, examines its influence on institutional investors’ decision processes through a phenomenological approach. The study employs thematic analysis based on in-depth interviews with 19 professionals in institutional investment organizations in Türkiye. The findings suggest that information overload is experienced as cognitive strain that may prolong decision processes, may be associated with analysis paralysis and perceived changes in decision quality, and may be associated with increased uncertainty and potential challenges in interpreting risk. These findings provide exploratory insight into how information density may influence risk interpretation and portfolio assessment, and how institutional investors perceive decision-making efficiency.

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