Market reaction to the positiveness of annual report narratives

Liafisu Sina Yekini; Tomasz Piotr Wisniewski; Yuval Millo

doi:10.1016/j.bar.2015.12.001

Market reaction to the positiveness of annual report narratives

Liafisu Sina Yekini
, Tomasz Piotr Wisniewski
, Yuval Millo

Research output: Contribution to journal › Article › peer-review

81 Citations (Scopus)

471 Downloads (Pure)

Abstract

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.

Original language	English
Pages (from-to)	415-430
Journal	The British Accounting Review
Volume	48
Issue number	4
DOIs	https://doi.org/10.1016/j.bar.2015.12.001
Publication status	Published - 11 Dec 2015

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in The British Accounting Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in The British Accounting Review, [VOL 48, ISSUE 4, (2015)] DOI: 10.1016/j.bar.2015.12.001

© 2015, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

Annual report narrative
Content analysis
Stock market reaction

Access to Document

10.1016/j.bar.2015.12.001

1-s2 0-S0890838915300044-mainFinal published version, 863 KB

Cite this

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title = "Market reaction to the positiveness of annual report narratives",

abstract = "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. ",

keywords = "Annual report narrative, Content analysis, Stock market reaction",

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year = "2015",

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doi = "10.1016/j.bar.2015.12.001",

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AU - Yekini, Liafisu Sina

AU - Wisniewski, Tomasz Piotr

AU - Millo, Yuval

N1 - NOTICE: this is the author’s version of a work that was accepted for publication in The British Accounting Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in The British Accounting Review, [VOL 48, ISSUE 4, (2015)] DOI: 10.1016/j.bar.2015.12.001 © 2015, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

PY - 2015/12/11

Y1 - 2015/12/11

N2 - 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.

AB - 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.

KW - Annual report narrative

KW - Content analysis

KW - Stock market reaction

U2 - 10.1016/j.bar.2015.12.001

DO - 10.1016/j.bar.2015.12.001

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JF - The British Accounting Review

IS - 4

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Market reaction to the positiveness of annual report narratives

Abstract

Bibliographical note

Keywords

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Cite this