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Market reaction to positiveness of annual report narratives

Yekini, Liafisu Sina; Wisniewski, Tomasz Piotr and Millo, Yuval (2016). Market reaction to positiveness of annual report narratives. British Accounting Review, 48(4) pp. 415–430.

DOI (Digital Object Identifier) Link: https://doi.org/10.1016/j.bar.2015.12.001
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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.

Item Type: Journal Item
Copyright Holders: 2015 Elsevier
ISSN: 0890-8389
Keywords: Annual report narrative; Content analysis; Stock market reaction
Academic Unit/School: Faculty of Business and Law (FBL) > Business > Department for Accounting and Finance
Faculty of Business and Law (FBL) > Business
Faculty of Business and Law (FBL)
Item ID: 55373
Depositing User: Tomasz Wisniewski
Date Deposited: 11 Jun 2018 14:38
Last Modified: 06 May 2019 05:25
URI: http://oro.open.ac.uk/id/eprint/55373
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