Forward-looking information disclosure tone, financing constraints and marketing expenditures

Chenggang Li, Ying Yan, Xiaodong Wang and Shengnan Wan

Asia-Pacific Journal of Accounting & Economics, 2024, vol. 31, issue 4, 586-603

Abstract: Forward-looking information is often seen as private messages that managers deliver to the public, and a positive tone usually implies a positive signal from them. We use a sample of Shanghai and Shenzhen A-shares from 2011 to 2020 to examine the relationships between forward-looking information tone and company marketing expenditures. Our findings show that: first, forward-looking information tones contain valuable content that investors can comprehend, and the more positive the tone, the greater the marketing expenditures a company has. Second, this positive relationship is strengthened for companies that are more financially constrained. Finally, optimistic forward-looking messages can increase marketing expenditures in a greater magnitude for companies operating in the areas subject to a higher degree of marketisation.

Date: 2024
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DOI: 10.1080/16081625.2023.2286987

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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