Market reaction to the positiveness of annual report narratives

Liafisu Sina Yekini, Tomasz Piotr Wisniewski and Yuval Millo

The British Accounting Review, 2016, vol. 48, issue 4, 415-430

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 (search for similar items in EconPapers)
JEL-codes: G12 G14 M41 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:48:y:2016:i:4:p:415-430

DOI: 10.1016/j.bar.2015.12.001

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