Abstract

http://ssrn.com/abstract=1510188
 
 

References (28)



 
 

Citations (3)



 


 



Barron’s Red Flags: Do They Actually Work?


Tim Loughran


University of Notre Dame

Bill McDonald


University of Notre Dame - Mendoza College of Business - Department of Finance

May 9, 2011

Journal of Behavioral Finance, Forthcoming

Abstract:     
Investors are often concerned that managers might hide negative information in filings. With advances in textual analysis and widespread document availability, individuals can now easily search for phrases that might be red flags indicating questionable behavior. We examine the impact of 13 suspicious phrases identified by a Barron’s article in a large sample of 10-Ks. There is evidence that phrases like unbilled receivables signal a firm may subsequently be accused of fraud. At the 10-K filing date, phrases like substantial doubt are linked with significantly lower filing date excess stock returns, higher volatility, and greater analyst earnings forecast dispersion.

Number of Pages in PDF File: 22

Keywords: textual analysis, fraud, red flag phrases, Madoff

working papers series


Download This Paper

Date posted: November 21, 2009 ; Last revised: May 12, 2011

Suggested Citation

Loughran, Tim and McDonald, Bill, Barron’s Red Flags: Do They Actually Work? (May 9, 2011). Journal of Behavioral Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1510188 or http://dx.doi.org/10.2139/ssrn.1510188

Contact Information

Tim Loughran (Contact Author)
University of Notre Dame ( email )
Department of Finance
245 Mendoza College of Business
Notre Dame, IN 46556-5646
United States
574-631-8432 (Phone)
574-631-5255 (Fax)
Bill McDonald
University of Notre Dame - Mendoza College of Business - Department of Finance ( email )
P.O. Box 399
Notre Dame, IN 46556-0399
United States
Feedback to SSRN


Paper statistics
Abstract Views: 4,114
Downloads: 717
Download Rank: 18,223
References:  28
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.282 seconds