The effects of manager sentiment in financial disclosure: Perspectives of operational efficiency and market reaction

Chunlan Wang, Jianxuan Xin, Fangfang Sun, Yan Shi and Yuxuan Du

Finance Research Letters, 2024, vol. 64, issue C

Abstract: This study constructs a measure of managerial optimism using textual and nonparametric estimation methods, exploring its impact on company operational efficiency and market reactions. Findings indicate that managerial optimism positively influences stock price returns over the subsequent year by enhancing internal operational efficiency and reducing analyst forecast dispersion, with a more pronounced effect in state-owned enterprises. Utilizing information from the MD&A (Manager Discussion and Analysis) section of annual reports, this research demonstrates the role of managerial optimism in company operations and market reactions, offering empirical evidence for corporate behavioral finance research and practical implications for management practice.

Keywords: MD&A tone; Managerial optimism; Operational efficiency; Analyst forecasts dispersion; Stock return (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324004550

DOI: 10.1016/j.frl.2024.105425

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