Tone Management

• 成果类型: Article
• 署名作者: Huang, Xuan; Teoh, Siew Hong; Zhang, Yinglei
• 署名单位: California State University System; California State University Long Beach; University of California System; University of California Irvine; Chinese University of Hong Kong
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50684
• 发表日期: 2014
• 页码: 1083-1113
• 关键词: earnings management; information-content; STOCK; DISCLOSURES; press; FIRMS; CONSEQUENCES; language; errors

摘要

We investigate whether and when firms manage the tone of words in earnings press releases, and how investors react to tone management. We estimate abnormal positive tone, ABTONE, as a measure of tone management from residuals of a tone model that controls for firm quantitative fundamentals such as performance, risk, and complexity. We find that ABTONE predicts negative future earnings and cash flows, is positively associated with upward perception management events, such as, just meeting/beating thresholds, future earnings restatements, SEO, and M&A, and is negatively associated with a downward perception management event, stock option grants. ABTONE has a positive stock return effect at the earnings announcement and a delayed negative reaction in the one and two quarters afterward. Balance sheet constrained firms and older firms are more likely to employ tone management over accruals management. Overall, the evidence is consistent with managers using strategic tone management to mislead investors about firm fundamentals.