The use and trend of emotional language in the banks’ annual reports: the state of the global financial crisis

Abstract

This study is of an exploratory nature as it seeks to explore the extent to which the language of emotions in the banks’ annual reports is affected by the global financial crisis (GFC). The language of emotions was analyzed using eight categories (trust, anticipation, sadness, anger, fear, disgust, surprise and joy) in annual reports of 12 listed banks from six countries in the Middle East area (namely, Jordan, Kingdom of Bahrain, United Arab Emirates, Sultanate of Oman, Kuwait, Kingdom of Saudi Arabia) from 2002 to 2017. The final data set consists of 192 bank-year observations. The study time was divided into three periods (pre, during and post GFC). In addition, the study enriches accounting literature by being the first study to test Pollyanna hypothesis using emotion analysis. The results of the study show that the percentage of emotional words in banks’ annual reports (2002–2017) represents almost 22% on average. The trust, anticipation and fear categories were the most affected than other emotional categories during GFC. While the trust category decreased, both the fear and anticipation categories increased. Other findings of the study show that regardless of GFC, emotional words of trust and anticipation categories in banks’ annual reports have dominated the emotional words of the disgust and surprise categories. Therefore, Pollyanna hypothesis is supported. In contrast to the emotional words of the joy category in banks’ annual reports which has not dominated the sadness category. In this case, Pollyanna hypothesis is rejected.

Forward-looking disclosure tone in the chairman’s statement: obfuscation or truthful explanations

“…We can conclude that Omani managers are honest and truthful with their stakeholders, and always try to disclose the relevant information to stakeholders, whether it is good or bad news. The results are consistent with Elamir and Mousa’s (2019) findings that trust words, as part of disclosure tone, dominate banks’ annual reports in the Middle East region.…”

“…Signalling theory postulates that managers of profitable firms disclose more information to signal their good achievement and to increase investors’ confidence (Aly et al , 2018). In this line, corporate disclosure provides an opportunity for the firm to create a certain image in the minds of investors and convince them that the firm is performing well to maximise their benefits (Elamir and Mousa, 2019). Managers tend to put their best effort into optimistically displaying firm performance using positive words and themes rather than negative ones (Schleicher, 2012).…”

The Persuasiveness of Research Abstracts through Analytical Thinking and Emotional Tone Domains in Academic Research Writing

“…The concept of persuasion in the writers' lexico-phrasal choice of rhetoric was also explored by [15] in their study on 5 million lexical items in a compilation of essays. They concluded that people would write their texts with a positive tone over a negative tone to appeal to emotions.…”

“…Furthermore, the Readable.com online application is another tool of online application that can be used to analyze emotional sentiment based on the frequencies in the choice of words presented in a text [17]. In their qualitative study of institutional reports on the global crisis published annually, [15] applied the NVivo software to analyze the words used to determine the tones and emotions in human language. It was discovered that the positive tone of language was demonstrated highly frequently through numerous lexical items, which reflected optimism and confidence, compared to the negative tone of words, which demonstrated disappointment and displease.…”

Nationality Diversity in Corporate Boards and Tax Avoidance: Evidence from Oman

“…We focus on the Omani context for a number of reasons. First, Oman is one of the Middle East and North Africa (MENA) countries that witnesses in relation to its corporate governance practice (Elamir and Mousa 2019;Salem et al 2021). Omani firms have the highest block ownership compared with other MENA countries.…”