Abstract

http://ssrn.com/abstract=1650003
 
 

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The Real Effects of Disclosure Tone: Evidence from Restatements


Art Durnev


University of Iowa - Henry B. Tippie College of Business

Claudine Mangen


Concordia University, Montreal - John Molson School of Business

September 12, 2011


Abstract:     
This study analyzes whether the tone of financial disclosures affects corporate investments, using texts released by firms that publicly announce restatements of their financial reports. We argue that the tone of restatement texts provides news about restating firms' private information regarding unknown future investment payoffs. We find that restatement tone carries news, because it affects restating firms' and their competitors' abnormal returns at restatement announcements, and changes their information asymmetry. Moreover, we document that news in the restatement tone matters for corporate investments, since it is related to subsequent changes in restating firms' and their competitors' investments.

Number of Pages in PDF File: 55

Keywords: language tone, restatements, investment

JEL Classification: M43, M41, M45

working papers series


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Date posted: July 31, 2010 ; Last revised: March 9, 2012

Suggested Citation

Durnev, Art and Mangen, Claudine, The Real Effects of Disclosure Tone: Evidence from Restatements (September 12, 2011). Available at SSRN: http://ssrn.com/abstract=1650003 or http://dx.doi.org/10.2139/ssrn.1650003

Contact Information

Artyom Durnev (Contact Author)
University of Iowa - Henry B. Tippie College of Business ( email )
108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
(514) 398-5394 (Phone)
(514) 398-3876 (Fax)
HOME PAGE: http://www.artdurnev.com
Claudine Mangen
Concordia University, Montreal - John Molson School of Business ( email )
1450 Guy Street
Montreal, Quebec H3H 0A1
Canada
+ 1(514) 848 24 24 2747 (Phone)
+1 (514) 848 45 18 (Fax)
HOME PAGE: http://jmsb.concordia.ca/~cmangen/
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