IDEAS home Printed from https://ideas.repec.org/a/bla/jbfnac/v53y2026i3p1263-1286.html

Narratives Contextualizing Numeric Disclosures: Insights From Earnings Calls

Author

Listed:
  • Imelda Taraj
  • Ranik Raaen Wahlstrøm

Abstract

We investigate how narrative disclosures during earnings conference calls (ECCs) provide context for quantitative numeric disclosures in quarterly earnings releases, enhancing their informativeness. Drawing on a large sample of 34,918 quarterly ECCs from 1621 US‐listed firms from 2007 to 2020, we extract interpretable textual attributes—such as tone, specificity, novelty, and thematic content—from introductions, analyst questions, and management answers. Using stochastic gradient boosting, we model the nonlinear and interactive effects of these attributes with firm fundamentals and financial metrics. Our results reveal that narrative disclosures substantially improve the ability of firm fundamentals and financial metrics to explain market responses, both immediately and over longer horizons. We complement our analysis with Shapley additive explanations (SHAP) to identify which textual features most influence investor reactions and how their effects vary across contexts. Immediate market responses are primarily attributable to direct cues, such as the tone, while longer term responses increasingly reflect more complex content, such as strategic themes and support activities. These effects are especially pronounced when earnings surprises are either very negative or close to zero, and for firms with lower institutional ownership. They have also become more salient over time, suggesting that shifts in investor attention and analytical sophistication may be reshaping how financial narratives are processed. Our results contribute to understanding the contextual role of narrative disclosures in financial communication and illustrate the value of explainable AI in accounting research.

Suggested Citation

  • Imelda Taraj & Ranik Raaen Wahlstrøm, 2026. "Narratives Contextualizing Numeric Disclosures: Insights From Earnings Calls," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 53(3), pages 1263-1286, June.
    • Handle: RePEc:bla:jbfnac:v:53:y:2026:i:3:p:1263-1286
    DOI: 10.1111/jbfa.70056
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jbfa.70056
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jbfa.70056?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Douglas J. Skinner & Richard G. Sloan, 2002. "Earnings Surprises, Growth Expectations, and Stock Returns or Don't Let an Earnings Torpedo Sink Your Portfolio," Review of Accounting Studies, Springer, vol. 7(2), pages 289-312, June.
    2. Edmund Keung & Zhi‐Xing Lin & Michael Shih, 2010. "Does the Stock Market See a Zero or Small Positive Earnings Surprise as a Red Flag?," Journal of Accounting Research, Wiley Blackwell, vol. 48(1), pages 91-121, March.
    3. Tim Loughran & Bill Mcdonald, 2016. "Textual Analysis in Accounting and Finance: A Survey," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 54(4), pages 1187-1230, September.
    4. Brian J. Bushee & Theodore H. Goodman, 2007. "Which Institutional Investors Trade Based on Private Information About Earnings and Returns?," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 45(2), pages 289-321, May.
    5. John M. Griffin & Nicholas Hirschey & Samuel Kruger, 2023. "Do Municipal Bond Dealers Give Their Customers “Fair and Reasonable” Pricing?," Journal of Finance, American Finance Association, vol. 78(2), pages 887-934, April.
    6. Xi Fu & Xiaoxi Wu & Zhifang Zhang, 2021. "The Information Role of Earnings Conference Call Tone: Evidence from Stock Price Crash Risk," Journal of Business Ethics, Springer, vol. 173(3), pages 643-660, October.
    7. Kristian D. Allee & Matthew D. Deangelis, 2015. "The Structure of Voluntary Disclosure Narratives: Evidence from Tone Dispersion," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 53(2), pages 241-274, May.
    8. Allison Koester & Russell Lundholm & Mark Soliman, 2016. "Attracting Attention in a Limited Attention World: Exploring the Causes and Consequences of Extreme Positive Earnings Surprises," Management Science, INFORMS, vol. 62(10), pages 2871-2896, October.
    9. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    10. Julian Senoner & Torbjørn Netland & Stefan Feuerriegel, 2022. "Using Explainable Artificial Intelligence to Improve Process Quality: Evidence from Semiconductor Manufacturing," Management Science, INFORMS, vol. 68(8), pages 5704-5723, August.
    11. Xi Chen & Yang Ha (Tony) Cho & Yiwei Dou & Baruch Lev, 2022. "Predicting Future Earnings Changes Using Machine Learning and Detailed Financial Data," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 60(2), pages 467-515, May.
    12. Blankespoor, Elizabeth & deHaan, Ed & Marinovic, Iván, 2020. "Disclosure processing costs, investors’ information choice, and equity market outcomes: A review," Journal of Accounting and Economics, Elsevier, vol. 70(2).
    13. Angela K. Davis & Weili Ge & Dawn Matsumoto & Jenny Li Zhang, 2015. "The effect of manager-specific optimism on the tone of earnings conference calls," Review of Accounting Studies, Springer, vol. 20(2), pages 639-673, June.
    14. Alina Lerman & Joshua Livnat & Richard R. Mendenhall, 2007. "Double Surprise into Higher Future Returns," Financial Analysts Journal, Taylor & Francis Journals, vol. 63(4), pages 63-71, July.
    15. Jason V. Chen & Venky Nagar & Jordan Schoenfeld, 2018. "Manager-analyst conversations in earnings conference calls," Review of Accounting Studies, Springer, vol. 23(4), pages 1315-1354, December.
    16. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    17. Daniel, Kent, et al, 1997. "Measuring Mutual Fund Performance with Characteristic-Based Benchmarks," Journal of Finance, American Finance Association, vol. 52(3), pages 1035-1058, July.
    18. Marina Druz & Ivan Petzev & Alexander F. Wagner & Richard J. Zeckhauser, 2020. "When Managers Change Their Tone, Analysts and Investors Change Their Tune," Financial Analysts Journal, Taylor & Francis Journals, vol. 76(2), pages 47-69, April.
    19. Miao Liu, 2022. "Assessing Human Information Processing in Lending Decisions: A Machine Learning Approach," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 60(2), pages 607-651, May.
    20. Ties de Kok, 2025. "ChatGPT for Textual Analysis? How to Use Generative LLMs in Accounting Research," Management Science, INFORMS, vol. 71(9), pages 7888-7906, September.
    21. Edmund Keung & Zhi‐Xing Lin & Michael Shih, 2010. "Does the Stock Market See a Zero or Small Positive Earnings Surprise as a Red Flag?," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 48(1), pages 105-136, March.
    22. Richard Frankel & William J. Mayew & Yan Sun, 2010. "Do pennies matter? Investor relations consequences of small negative earnings surprises," Review of Accounting Studies, Springer, vol. 15(1), pages 220-242, March.
    23. Stewart Jones, 2017. "Corporate bankruptcy prediction: a high dimensional analysis," Review of Accounting Studies, Springer, vol. 22(3), pages 1366-1422, September.
    24. Nerissa C. Brown & Richard M. Crowley & W. Brooke Elliott, 2020. "What Are You Saying? Using topic to Detect Financial Misreporting," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 58(1), pages 237-291, March.
    25. Price, S. McKay & Doran, James S. & Peterson, David R. & Bliss, Barbara A., 2012. "Earnings conference calls and stock returns: The incremental informativeness of textual tone," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 992-1011.
    26. William J. Mayew & Mohan Venkatachalam, 2012. "The Power of Voice: Managerial Affective States and Future Firm Performance," Journal of Finance, American Finance Association, vol. 67(1), pages 1-44, February.
    27. Allen H. Huang & Reuven Lehavy & Amy Y. Zang & Rong Zheng, 2018. "Analyst Information Discovery and Interpretation Roles: A Topic Modeling Approach," Management Science, INFORMS, vol. 64(6), pages 2833-2855, June.
    28. Mengxia Zhang & Lan Luo, 2023. "Can Consumer-Posted Photos Serve as a Leading Indicator of Restaurant Survival? Evidence from Yelp," Management Science, INFORMS, vol. 69(1), pages 25-50, January.
    29. José María Liberti & Mitchell A Petersen, 2019. "Information: Hard and Soft," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 8(1), pages 1-41.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christoph J. Sextroh & Juliane Wutzler, 2025. "Speaking with one voice? Individual preferences and managers’ personal communication style," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 52(1), pages 5-47, February.
    2. Blankespoor, Elizabeth & deHaan, Ed & Marinovic, Iván, 2020. "Disclosure processing costs, investors’ information choice, and equity market outcomes: A review," Journal of Accounting and Economics, Elsevier, vol. 70(2).
    3. Bhagwat, Vineet & Shirley, Sara E. & Stark, Jeffrey R., 2024. "Task-oriented speech and information processing," Journal of Banking & Finance, Elsevier, vol. 161(C).
    4. Olga Bogachek & Antonio De Vito & Paul Demeré & Francesco Grossetti, 2026. "Using narrative disclosures to predict tax outcomes," Review of Accounting Studies, Springer, vol. 31(1), pages 374-412, March.
    5. Rajiv D. Banker & Hui Ding & Rong Huang & Xiaorong Li, 2024. "Market Reaction to CEOs’ Dynamic Hemifacial Asymmetry of Expressions," Management Science, INFORMS, vol. 70(7), pages 4847-4874, July.
    6. Daphne Lui & Andreea Moraru‐Arfire & Cong Tao, 2025. "The Nexus of Corporate Disclosure and Investors’ Information Needs: An Analysis Using Topic Modeling," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 52(5), pages 2145-2174, November.
    7. Jonas Ewertz & Charlotte Knickrehm & Martin Nienhaus & Doron Reichmann, 2026. "Listen Closely: Measuring Vocal Tone in Corporate Disclosures," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 64(1), pages 229-277, March.
    8. Zeckhauser, Richard, 2017. "Straight Talkers and Vague Talkers: The Effects of Managerial Style in Earnings Conference Calls," Working Paper Series rwp17-017, Harvard University, John F. Kennedy School of Government.
    9. Do, Chuong, 2024. "Financial analysts' information discovery: A study of manager-analyst interactions in conference calls," Advances in accounting, Elsevier, vol. 64(C).
    10. Richard Frankel & Jared Jennings & Joshua Lee, 2022. "Disclosure Sentiment: Machine Learning vs. Dictionary Methods," Management Science, INFORMS, vol. 68(7), pages 5514-5532, July.
    11. Da Xu, 2026. "Earnings Call Slide Deck," Management Science, INFORMS, vol. 72(7), pages 6146-6179, July.
    12. Frederic Lammers & Ulrich Pape, 2025. "CEO Narcissism and Linguistic Complexity in Earnings Conference Calls," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(3), pages 3081-3106, September.
    13. Ben Angelo & Mitchell Johnston & Atul Singh & Yun Qing Wan, 2025. "Tone Distance: Managerial Tone Divergence and Market Reaction to Earnings Announcements," The Financial Review, Eastern Finance Association, vol. 60(4), pages 1415-1435, November.
    14. Devrimi Kaya & Christian Maier & Tobias Böhmer, 2020. "Empirische Kapitalmarktforschung zu Conference Calls: Eine Literaturanalyse [Empirical Capital Market Research on Conference Calls: A Literature Review]," Schmalenbach Journal of Business Research, Springer, vol. 72(2), pages 183-212, June.
    15. Hong Kim Duong & Chuong Do & Huy N. Do, 2025. "Managers’ staging of earnings conference calls around actual share repurchases," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 52(1), pages 295-341, February.
    16. Mansouri, Sasan, 2021. "Does firm's silence drive media's attention away?," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242433, Verein für Socialpolitik / German Economic Association.
    17. Runmei Luo & Yong Ye & Jingxuan Li, 2025. "Shining moments: strategic timing of online earnings communication conference," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 15(2), pages 593-630, June.
    18. Yongqiang Chu & Bo Huang & Haitong Li & Junqi Liu, 2025. "Product market competition and disclosure content differentiation: A topic modeling analysis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 52(2), pages 691-721, April.
    19. Allee, Kristian D. & Do, Chuong & Sterin, Mikhail, 2021. "Product market competition, disclosure framing, and casting in earnings conference calls," Journal of Accounting and Economics, Elsevier, vol. 72(1).
    20. Kiridaran Kanagaretnam & Wen Li & Guifeng Shi & Zejiang Zhou, 2025. "Ambiguity of tone in annual reports and bank risk taking," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(1), pages 935-970, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jbfnac:v:53:y:2026:i:3:p:1263-1286. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.