Each year, firms disclose information that is analyzed and eventually reflected in the market price. Sources of information are for example annual reports, earnings announcements and press releases. In the past, financial accounting research focused primarily on the numerical financial information disclosed (cf. Hales et al. 2011, 224).1 Interestingly, research showed that asset price movements could only partly be explained by this quantitative information and thus must have additional influencing factors (cf. Demers/Vega 2010, 2).
Since corporate disclosure generally consists only to a small fraction of qualitative data and dominantly of textual information (cf. Li 2011, 1)2, and since language is the natural medium through which people communicate, financial accounting research started to focus on the analysis of textual disclosure (cf. Hales et al. 2011, 224). Results of these studies show that different aspects of textual disclosure, like the tone (how information is written/expressed) or the readability can influence for example market prices or analyst behavior (e.g. Li 2010 or Tetlock/Saar-Tsechansky/Macskassy 2008).
This paper focuses on research in the field of tone as important characteristic of corporate textual disclosure. Its aim is to provide an overview about the most recent approaches and about challenges that researchers face.
The remainder of this paper proceeds as follows. In section 2 the importance of textual analysis and the information content of textual information are discussed. Furthermore this section provides an overview about different approaches to characterize textual disclosure and a tabular classification of the recent literature. Since this paper focuses on the tone of textual disclosure, different approaches to measure tone are discussed as well. In section 3 two recent studies are discussed and section 4 concludes with a summary of the main results of this paper and gives suggestions for future research.
Table of Content
List of figures
List of tables
List of abbreviations
1 Introduction
2 Theoretical Framework
2.1 Importance of textual analysis
2.2 Information content of textual disclosure
2.3 Characteristics of textual disclosure
2.4 Approaches of textual analysis
2.4.1 Manual vs. computer-based approach
2.4.2 Dictionary approach vs. statistical approach
3 Recent Studies
3.1 Feldman et al. (2010)
3.1.1 Data, Sample Selection and Variable Definition
3.1.2 Results
3.1.3 Business Impact
3.2 Hales et al. (2011)
3.2.1 Hypotheses and Design of Experiment 1
3.2.2 Results of Experiment 1
3.2.3 Hypotheses and Design of Experiment 2
3.2.4 Results of Experiment 2
3.2.5 Business Impact
4 Conclusion and future challenges
Bibliography
Appendix
-
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X.