Bragging rights: Does corporate boasting imply value creation?

Pratik Kothari, Don M. Chance and Stephen P. Ferris

Journal of Corporate Finance, 2021, vol. 67, issue C

Abstract: We examine S&P 500 firms over 1999–2014 that characterize their annual performance with extreme positive language. Only 18% of such firms increase shareholder value, while over 80% have either negative or insignificant abnormal returns. Our evidence suggests that firms often base their claims of extreme positive performance on high raw returns or strong relative accounting performance. In comparison to firms that generate positive abnormal returns without boasting, our sample firms tend to have superior accounting performance. We conclude that boasting about performance is rarely associated with value creation and is more consistent with an emphasis on accounting metrics.

Keywords: Shareholder wealth; Shareholder value; Shareholder wealth maximization; Abnormal returns; Accounting performance; Textual analysis; Press releases; Annual report (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0929119920303072
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:67:y:2021:i:c:s0929119920303072

DOI: 10.1016/j.jcorpfin.2020.101863

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().