Linguistic Complexity in Firm Disclosures: Obfuscation or Information?

• 成果类型: Article
• 署名作者: Bushee, Brian J.; Gow, Ian D.; Taylor, Daniel J.
• 署名单位: University of Pennsylvania; University of Melbourne
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12179
• 发表日期: 2018
• 页码: 85-121
• 关键词: ANNUAL-REPORT READABILITY; CONFERENCE CALLS; Textual analysis; CURRENT EARNINGS; analysts

摘要

Prior research generally interprets complex language in firms' disclosures as indicative of managerial obfuscation. However, complex language can also reflect the provision of complex information; for example, informative technical disclosure. As a consequence, linguistic complexity commingles two latent componentsobfuscation and informationthat are related to information asymmetry in opposite directions. We develop a novel empirical approach to estimate these two latent components within the context of quarterly earnings conference calls. We validate our estimates of these two latent components by examining their relation to information asymmetry. Consistent with our predictions, we find that our estimate of the information component is negatively associated with information asymmetry while our estimate of the obfuscation component is positively associated with information asymmetry. Our findings suggest that future research on linguistic complexity can construct more powerful tests by separately examining these two latent components of linguistic complexity.