The Informational Role of Analysts' Textual Statements

Forthcoming in Research in International Business and Finance

35 Pages Posted: 19 Nov 2019 Last revised: 4 Oct 2021

See all articles by Kotaro Miwa

Kotaro Miwa

Kyushu University - Faculty of Economics

Date Written: January 29, 2021

Abstract

This study explores the reasons why textual tones in analysts’ reports, a representative qualitative content of analysts’ reports, possess informational value. We predict that analysts use textual statements to disclose fundamental information that is not reflected in their quantitative outputs. Consistent with our prediction, we find that tones predict subsequent revisions in earnings and sales forecasts. Furthermore, the results show that the information contained in the tone differs among analysts with different incentives to utilize the textual statements, supporting the intentional disclosure story. In addition, the lead-lag relationship between textual and quantitative outputs induces a gradual price adjustment to the information contained in the textual tone.

Keywords: analyst report; textual information; report tone; earnings forecasts; sales forecasts

JEL Classification: G10, G14, G20

Suggested Citation

Miwa, Kotaro, The Informational Role of Analysts' Textual Statements (January 29, 2021). Forthcoming in Research in International Business and Finance, Available at SSRN: https://ssrn.com/abstract=3481621 or http://dx.doi.org/10.2139/ssrn.3481621

Kotaro Miwa (Contact Author)

Kyushu University - Faculty of Economics ( email )

6-19-1, Hakozaki
Higashi-ku
Fukuoka, Fukuoka 8128581
Japan

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