Earnings conference calls and stock returns: The incremental informativeness of textual tone

Price, S. McKay; Doran, James; Peterson, David R.; Bliss, Barbara A.

doi:10.1016/j.jbankfin.2011.10.013

Cited by 469 publications

(345 citation statements)

References 62 publications

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“…These studies have been primarily investigating whether disclosure tone represents any incremental information for financial market participants (e.g., Davis et al, 2012;Price et al, 2012). Most of these studies examine the associations between disclosure tone, managerial incentives and/or market effects, and share the same methodology-that is, the analysis of a large number of documents using computer software (e.g., Feldman et al, 2010;Baginski et al, 2011).…”

Section: Introductionmentioning

confidence: 99%

Impression Management and Organizational Audiences: The Fiat Group Case

2013

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In this paper we investigate whether, and how, corporate management strategically uses disclosure to manage the perceptions of different organizational audiences. In particular, we examine the interactions between the FIAT Group and three of its key organizational audiences-the local press, the international press and the financial analysts, which are characterized by different levels of salience for the company. We focus on both how management reacts to the optimism level existing within each audience and how the narrative disclosure tone adopted by FIAT influences the ex-post optimism in the local and international press or in the financial analyst community. We investigate the disclosure of the FIAT Group over a six-year period (2004)(2005)(2006)(2007)(2008)(2009), during which 70 price-sensitive press releases were published. On the basis of 1,887 (331) news articles published in Italian (international) newspapers and 411 analyst reports, we report evidence of different strategic patterns in the interaction processes between FIAT and its audiences. Our findings also indicate some differences in the way FIAT is affected by, and in turn, affects the sentiment of each audience, thus highlighting that the salience of the stakeholder is an important driver of the adoption of impression management techniques. Taken together, our findings point to issues related to setting the "tone at the top" and potential ethical matters.

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Section: Introductionmentioning

confidence: 99%

Impression Management and Organizational Audiences: The Fiat Group Case

2013

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“…Some studies further reported that disclosure decisions are associated with management incentives (Merkley, 2014;Kravet & Muslu, 2013;Davis, Piger, & Sedor, 2012;Price, Doran, Peterson, & Bliss, 2012;Loughran & McDonald, 2011;Henry, 2008;Li, 2006). This study differs from above-mentioned studies in attempting to examine the relationship between the disclosure of MI and CSR companies by examining whether CSR companies are more likely to disclosure the MI, because CSR matters to the market, and assessments of CSR can potentially provide useful and timely information to investors.…”

Section: Literature Reviewmentioning

confidence: 92%

Exploring the Nature of Material Information: Disclosure and Its Implications

Wang¹,

Syu²

2015

IJEF

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Understanding the nature of material information is of crucial importance to regulators and the investment community, particularly with regard to the implications of disclosure. This study examined the disclosure of material information by companies listed in Taiwan in various stages of their life cycle to identify the nature of material information as well as related firm performance and provides insights into their causes and consequences. Evidence suggests that companies intent on fulfilling their corporate social responsibilities are more likely to disclose material information and when doing so, they are highly valued by market participants. Our empirical results provide strong evidence that the disclosure of material information by socially responsible companies is associated with higher earnings quality. Furthermore, mature companies are more likely than growing companies to receive favorable reactions from market participants when they disclose material information.

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“…Henry's wordlist has already gained some popularity among researchers. For instance, it has been used to measure the tone of R&D disclosures (Merkley, 2014), transcripts of earnings conference calls Price et al, 2012;Davis, Ge, Matsumoto & Zhang, 2015), discretionary disclosures prior to restatements (Gordon, Henry, Peytcheva & Sun, 2013) and investment proposals submitted to business angles (Parhankangas & Ehrlich, 2014 Importantly, extant literature suggests that the tone of qualitative corporate reports may have non-negligible market impact. Kothari and Short's (2003) findings indicate that positive disclosure favourably affects cost of capital and price volatility, while Li (2010) shows that the tone of forward-looking statements has predictive power for the company's future performance.…”

Section: Research Contextmentioning

confidence: 99%

“…Previous literature examined, amongst others, corporate press releases (Ahern & Sosyura, 2014), quarterly earnings announcements and conference calls (Francis, Schipper, & Vincent, 2002;Demers & Vega, 2010;Price, Doran, Peterson, & Bliss, 2012;Davis, Piger, & Sedor, 2012). Notwithstanding the advances made in this area of research, relatively little attention has been paid to the narratives of annual reports as a whole.…”

Section: Introductionmentioning

confidence: 99%

Market Reaction to Positiveness of Annual Report Narratives

2014

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This paper focuses on narratives published by UK companies, defined here as the content of annual reports excluding financial statements and notes to accounts. We endeavour to gauge the tone of these narratives by recording the frequency of positive words appearing in the text. We show that the extent of positiveness is related to market reaction around the disclosure date. This conclusion is maintained even after controlling for the financial figures that are reported simultaneously and company-specific characteristics. Consequently, narratives should not be perceived as mere impression management tools, but also as conduits for disseminating price-sensitive information.JEL codes: M41; G12; G14

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Earnings conference calls and stock returns: The incremental informativeness of textual tone

Cited by 469 publications

References 62 publications

Impression Management and Organizational Audiences: The Fiat Group Case

Impression Management and Organizational Audiences: The Fiat Group Case

Exploring the Nature of Material Information: Disclosure and Its Implications

Market Reaction to Positiveness of Annual Report Narratives

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