IDEAS home Printed from https://ideas.repec.org/a/eee/corfin/v94y2025ics0929119925000811.html

Number of numbers: Does a greater proportion of quantitative textual disclosure reduce information risk?

Author

Listed:
  • Campbell, John L.
  • Zheng, Xin
  • Zhou, Dexin

Abstract

This study investigates the association between quantitative disclosure and information risk, hypothesizing that a greater proportion of numerical information in earnings conference calls decreases information risk and thus increases firm value. We find that, even after controlling for earnings information, more extensive numerical disclosure correlates positively with earnings announcement returns. This effect concentrates in firms with poorer information environments and during periods of heightened performance uncertainty. Finally, we show that a greater proportion of numerical disclosure reduces implied volatility, bid-ask spread, and implied cost of capital. Our findings highlight numerical disclosure's role in reducing information risk and emphasize its importance in financial disclosures.

Suggested Citation

  • Campbell, John L. & Zheng, Xin & Zhou, Dexin, 2025. "Number of numbers: Does a greater proportion of quantitative textual disclosure reduce information risk?," Journal of Corporate Finance, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:corfin:v:94:y:2025:i:c:s0929119925000811
    DOI: 10.1016/j.jcorpfin.2025.102813
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0929119925000811
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jcorpfin.2025.102813?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
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. David F. Larcker & Anastasia A. Zakolyukina, 2012. "Detecting Deceptive Discussions in Conference Calls," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 50(2), pages 495-540, May.
    2. William Ciconte & Marcus Kirk & Jennifer Wu Tucker, 2014. "Does the midpoint of range earnings forecasts represent managers’ expectations?," Review of Accounting Studies, Springer, vol. 19(2), pages 628-660, June.
    3. Paul C. Tetlock & Maytal Saar‐Tsechansky & Sofus Macskassy, 2008. "More Than Words: Quantifying Language to Measure Firms' Fundamentals," Journal of Finance, American Finance Association, vol. 63(3), pages 1437-1467, June.
    4. Skinner, Dj, 1994. "Why Firms Voluntarily Disclose Bad-News," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 32(1), pages 38-60.
    5. David Easley & Soeren Hvidkjaer & Maureen O'Hara, 2002. "Is Information Risk a Determinant of Asset Returns?," Journal of Finance, American Finance Association, vol. 57(5), pages 2185-2221, October.
    6. X. Frank Zhang, 2006. "Information Uncertainty and Stock Returns," Journal of Finance, American Finance Association, vol. 61(1), pages 105-137, February.
    7. Bonsall, Samuel B. & Leone, Andrew J. & Miller, Brian P. & Rennekamp, Kristina, 2017. "A plain English measure of financial reporting readability," Journal of Accounting and Economics, Elsevier, vol. 63(2), pages 329-357.
    8. 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.
    9. Piotroski, JD, 2000. "Value investing: The use of historical financial statement information to separate winners from losers," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 38, pages 1-41.
    10. García, Diego & Hu, Xiaowen & Rohrer, Maximilian, 2023. "The colour of finance words," Journal of Financial Economics, Elsevier, vol. 147(3), pages 525-549.
    11. Lauren Cohen & Dong Lou & Christopher J. Malloy, 2020. "Casting Conference Calls," Management Science, INFORMS, vol. 66(11), pages 5015-5039, November.
    12. Shuping Chen & Bin Miao & Terry Shevlin, 2015. "A New Measure of Disclosure Quality: The Level of Disaggregation of Accounting Data in Annual Reports," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 53(5), pages 1017-1054, December.
    13. Yen†Jung Lee, 2012. "The Effect of Quarterly Report Readability on Information Efficiency of Stock Prices," Contemporary Accounting Research, John Wiley & Sons, vol. 29(4), pages 1137-1170, December.
    14. 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.
    15. Elizabeth Blankespoor, 2019. "The Impact of Information Processing Costs on Firm Disclosure Choice: Evidence from the XBRL Mandate," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 57(4), pages 919-967, September.
    16. Tim Loughran & Bill Mcdonald, 2014. "Measuring Readability in Financial Disclosures," Journal of Finance, American Finance Association, vol. 69(4), pages 1643-1671, August.
    17. 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.
    18. Lee, Charles & Ng, David & Swaminathan, Bhaskaran, 2009. "Testing International Asset Pricing Models Using Implied Costs of Capital," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 44(2), pages 307-335, April.
    19. Cohen, Lauren & Lou, Dong & Malloy, Christopher, 2020. "Casting conference calls," LSE Research Online Documents on Economics 101136, London School of Economics and Political Science, LSE Library.
    20. John L. Campbell & Hsinchun Chen & Dan S. Dhaliwal & Hsin-min Lu & Logan B. Steele, 2014. "The information content of mandatory risk factor disclosures in corporate filings," Review of Accounting Studies, Springer, vol. 19(1), pages 396-455, March.
    21. Diamond, Douglas W & Verrecchia, Robert E, 1991. "Disclosure, Liquidity, and the Cost of Capital," Journal of Finance, American Finance Association, vol. 46(4), pages 1325-1359, September.
    22. Richard Lambert & Christian Leuz & Robert E. Verrecchia, 2007. "Accounting Information, Disclosure, and the Cost of Capital," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 45(2), pages 385-420, May.
    23. Paul C. Tetlock, 2007. "Giving Content to Investor Sentiment: The Role of Media in the Stock Market," Journal of Finance, American Finance Association, vol. 62(3), pages 1139-1168, June.
    24. Beyer, Anne & Cohen, Daniel A. & Lys, Thomas Z. & Walther, Beverly R., 2010. "The financial reporting environment: Review of the recent literature," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 296-343, December.
    25. Hwang, Byoung-Hyoun & Kim, Hugh Hoikwang, 2017. "It pays to write well," Journal of Financial Economics, Elsevier, vol. 124(2), pages 373-394.
    26. Core, John E., 2001. "A review of the empirical disclosure literature: discussion," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 441-456, September.
    27. Dyer, Travis & Lang, Mark & Stice-Lawrence, Lorien, 2017. "The evolution of 10-K textual disclosure: Evidence from Latent Dirichlet Allocation," Journal of Accounting and Economics, Elsevier, vol. 64(2), pages 221-245.
    28. S. P. Kothari & Susan Shu & Peter D. Wysocki, 2009. "Do Managers Withhold Bad News?," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 47(1), pages 241-276, March.
    29. Samuel B. Bonsall & Brian P. Miller, 2017. "The impact of narrative disclosure readability on bond ratings and the cost of debt," Review of Accounting Studies, Springer, vol. 22(2), pages 608-643, June.
    30. Tim Loughran & Bill Mcdonald, 2011. "When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10‐Ks," Journal of Finance, American Finance Association, vol. 66(1), pages 35-65, February.
    31. Li, Feng, 2008. "Annual report readability, current earnings, and earnings persistence," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 221-247, August.
    32. John L. Campbell & Hye Seung “Grace” Lee & Hsin‐Min Lu & Logan B. Steele, 2020. "Express Yourself: Why Managers' Disclosure Tone Varies Across Time and What Investors Learn From It," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 1140-1171, June.
    33. David Hirshleifer & Sonya Seongyeon Lim & Siew Hong Teoh, 2009. "Driven to Distraction: Extraneous Events and Underreaction to Earnings News," Journal of Finance, American Finance Association, vol. 64(5), pages 2289-2325, October.
    34. Feng Li, 2010. "The Information Content of Forward‐Looking Statements in Corporate Filings—A Naïve Bayesian Machine Learning Approach," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 48(5), pages 1049-1102, December.
    35. Jegadeesh, Narasimhan & Wu, Di, 2013. "Word power: A new approach for content analysis," Journal of Financial Economics, Elsevier, vol. 110(3), pages 712-729.
    36. Chan, Louis K C & Jegadeesh, Narasimhan & Lakonishok, Josef, 1996. "Momentum Strategies," Journal of Finance, American Finance Association, vol. 51(5), pages 1681-1713, December.
    37. Bozanic, Zahn & Roulstone, Darren T. & Van Buskirk, Andrew, 2018. "Management earnings forecasts and other forward-looking statements," Journal of Accounting and Economics, Elsevier, vol. 65(1), pages 1-20.
    38. William R. Gebhardt & Charles M. C. Lee & Bhaskaran Swaminathan, 2001. "Toward an Implied Cost of Capital," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 39(1), pages 135-176, June.
    39. Benjamin E. Hermalin & Michael S. Weisbach, 2007. "Transparency and Corporate Governance," NBER Working Papers 12875, National Bureau of Economic Research, Inc.
    40. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
    41. 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. 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).
    2. Rjiba, Hatem & Saadi, Samir & Boubaker, Sabri & Ding, Xiaoya (Sara), 2021. "Annual report readability and the cost of equity capital," Journal of Corporate Finance, Elsevier, vol. 67(C).
    3. Richard Frankel & Jared Jennings & Joshua Lee, 2022. "Disclosure Sentiment: Machine Learning vs. Dictionary Methods," Management Science, INFORMS, vol. 68(7), pages 5514-5532, July.
    4. John L. Campbell & Hye Seung “Grace” Lee & Hsin‐Min Lu & Logan B. Steele, 2020. "Express Yourself: Why Managers' Disclosure Tone Varies Across Time and What Investors Learn From It," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 1140-1171, June.
    5. Chen, Xin & Park, June Woo & Tsang, Albert & Xin, Yingying, 2025. "CEO left-handedness and readability," International Review of Financial Analysis, Elsevier, vol. 105(C).
    6. Hong, Eunpyo & Kottimukkalur, Badrinath & Noh, Joonki, 2026. "Uncertain Text and Price Reactions to Earnings Releases," Journal of Banking & Finance, Elsevier, vol. 182(C).
    7. Pradhan, Rudra P. & Samarakoon, S.M.R.K. & Wijesinghe, B.A.C.H. & Maradana, Rana P., 2025. "Clear or confusing? How financial report readability and tone are associated with dividend payouts in Indian corporations," The Quarterly Review of Economics and Finance, Elsevier, vol. 104(C).
    8. 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).
    9. 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.
    10. Dutta, Shantanu & Fuksa, Michel & Macaulay, Ken, 2019. "Determinants of MD&A sentiment in Canada," International Review of Economics & Finance, Elsevier, vol. 60(C), pages 130-148.
    11. Li, Ken, 2022. "Textual fundamentals in earnings press releases," Advances in accounting, Elsevier, vol. 57(C).
    12. Christian Leuz & Peter D. Wysocki, 2016. "The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 54(2), pages 525-622, May.
    13. John Donovan & Jared Jennings & Kevin Koharki & Joshua Lee, 2021. "Measuring credit risk using qualitative disclosure," Review of Accounting Studies, Springer, vol. 26(2), pages 815-863, June.
    14. Noh, Joonki & Zhou, Dexin, 2022. "Executives’ Blaming external factors and market reactions: Evidence from earnings conference calls," Journal of Banking & Finance, Elsevier, vol. 134(C).
    15. John L. Campbell & Hsinchun Chen & Dan S. Dhaliwal & Hsin-min Lu & Logan B. Steele, 2014. "The information content of mandatory risk factor disclosures in corporate filings," Review of Accounting Studies, Springer, vol. 19(1), pages 396-455, March.
    16. Minxing Sun & Weike Xu, 2024. "Short selling and readability in financial disclosures: A controlled experiment," The Financial Review, Eastern Finance Association, vol. 59(2), pages 265-292, May.
    17. Beattie, Vivien, 2014. "Accounting narratives and the narrative turn in accounting research: Issues, theory, methodology, methods and a research framework," The British Accounting Review, Elsevier, vol. 46(2), pages 111-134.
    18. Chung, Dennis Y. & Hrazdil, Karel & Novak, Jiri & Suwanyangyuan, Nattavut, 2019. "Does the large amount of information in corporate disclosures hinder or enhance price discovery in the capital market?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 15(1), pages 36-52.
    19. Chen, Jean Jinghan & Song, Peiyang & Loi, Fai Lim, 2024. "Strategic forward-looking nonearnings disclosure and overinvestment," The British Accounting Review, Elsevier, vol. 56(6).
    20. Brian J. Bushee & Ian D. Gow & Daniel J. Taylor, 2018. "Linguistic Complexity in Firm Disclosures: Obfuscation or Information?," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 56(1), pages 85-121, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

    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:eee:corfin:v:94:y:2025:i:c:s0929119925000811. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jcorpfin .

    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.