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Textual fundamentals in earnings press releases

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  • Li, Ken

Abstract

I re-examine the information content of earnings press releases (EPRs) by distinguishing textual fundamentals (TF), which captures information content in non-tone language, from tone, which captures optimism and pessimism and is the focus of prior research. I find after controlling for standard firm characteristics, TF positively predicts future operating performance, unlike tone, which negatively predicts future operating performance. I document a return continuation in TF, in contrast to the return reversal in tone documented in prior literature. My findings distinguish informative content in TF and misleading content in tone in EPRs.

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  • Li, Ken, 2022. "Textual fundamentals in earnings press releases," Advances in accounting, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:advacc:v:57:y:2022:i:c:s0882611022000104
    DOI: 10.1016/j.adiac.2022.100591
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    More about this item

    Keywords

    Textual analysis; Earnings announcements; Tone; Textual fundamentals; Earnings press releases; Neural network;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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