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Following the crowd: peer effects in corporate annual report tone

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  • Liu, Chao
  • Liu, Xue J.
  • Faff, Robert

Abstract

Employing a sample of A-share companies in Shanghai and Shenzhen Stock Exchange from 2007 to 2024, we conduct an empirical study to examine whether and to what extent there is a peer effect in annual report tone. We document a significant positive peer effect of this type and it is more pronounced when the focal annual reports are delayed. In addition, peers have a more amplified effect on the focal firm’s tone for stocks with low institutional and private ownership stocks. Further analysis of the potential motivations shows that market competition, media coverage pressure, and culture all have a role to play. Additionally, we find that the peer effect of annual report tone weakens information efficiency, manifested in heightened stock price synchronicity. Our empirical results remain strong under a battery of robustness checks.

Suggested Citation

  • Liu, Chao & Liu, Xue J. & Faff, Robert, 2026. "Following the crowd: peer effects in corporate annual report tone," Research in International Business and Finance, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:riibaf:v:83:y:2026:i:c:s0275531926000280
    DOI: 10.1016/j.ribaf.2026.103301
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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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