Management's tone in MD&A disclosure and investment efficiency: Evidence from China

Weihua Zhou, Yuanjie Li, Deli Wang, Du Xueqin and Yishun Ke

Finance Research Letters, 2024, vol. 59, issue C

Abstract: We explore whether the management's tone in the Management Discussion & Analysis (MD&A) can predict the firm's investment efficiency in emerging markets. Using a dataset of Chinese listed firms from 2010 to 2021, we find that the more positive tone in MD&A disclosure is associated with the higher investment efficiency and the results still hold after a battery of robust tests. In addition, we find that the positive association between management’ tone in MD&A disclosure and investment efficiency is more particularly pronounced for non-state-owned firms, firms with more media coverage and firms in higher competition industry. Overall, our evidence highlights the importance of the quality of qualitative disclosures in improving investment efficiency.

Keywords: MD&A tone; Investment efficiency; Emerging markets (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:59:y:2024:i:c:s154461232301139x

DOI: 10.1016/j.frl.2023.104767

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