Different time, different tone: Company life cycle
Kathleen M. Bakarich,
Mahmud Hossain and
Journal of Contemporary Accounting and Economics, 2019, vol. 15, issue 1, 69-86
This paper examines how the qualitative characteristics of annual reports vary across different phases of the corporate life cycle. We measure the complexity, tone, and sentiment of 10-Ks, and classify firms into their distinct life cycle phases. Considering a sample of 24,268 firm-year observations from 2000 to 2014, we find that each of the life cycle indicators is a determinant of different textual characteristics. The results show that firms’ 10-K disclosures become less complex, less ambiguous, and more optimistic as they progress from the introduction to the maturity stage. Clarity and readability peak at the maturity level, prior to firms entering the final decline stage, characterized by the most negative and ambiguous disclosures. This paper provides timely evidence to regulators and investors on the circumstances under which firms provide qualitatively different disclosures and shows that the textual characteristics of firm disclosure are not static over life cycle stages.
Keywords: Qualitative disclosure; Firm life cycle; 10-K; Textual characteristics (search for similar items in EconPapers)
JEL-codes: L21 M41 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:15:y:2019:i:1:p:69-86
Access Statistics for this article
Journal of Contemporary Accounting and Economics is currently edited by Agnes C.S. Cheng, P. Clarkson, F.A. Gul, Zoltan Matolcsy, Dan Simunic and Ben Srinidhi
More articles in Journal of Contemporary Accounting and Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().