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The Structure of Voluntary Disclosure Narratives: Evidence from Tone Dispersion
Author(s) -
ALLEE KRISTIAN D.,
DEANGELIS MATTHEW D.
Publication year - 2015
Publication title -
journal of accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 6.767
H-Index - 141
eISSN - 1475-679X
pISSN - 0021-8456
DOI - 10.1111/1475-679x.12072
Subject(s) - tone (literature) , narrative , dispersion (optics) , voluntary disclosure , incentive , perception , accounting , business , psychology , economics , linguistics , microeconomics , neuroscience , philosophy , physics , optics
We examine tone dispersion, or the degree to which tone words are spread evenly within a narrative, to evaluate whether narrative structure provides insight into managers’ voluntary disclosures and users’ responses to those disclosures. We find that tone dispersion is associated with current aggregate and disaggregated performance and future performance, managers’ financial reporting decisions, and managers’ incentives and actions to manage perceptions. Furthermore, we find that tone dispersion is associated with analysts’ and investors’ responses to conference call narratives. Our results suggest that tone dispersion both reflects and affects the information that managers convey through their narratives.