The Real Effects of Managerial Narratives: Evidence from a Quarter-Billion Words

50 Pages Posted: 20 May 2012  

Art Durnev

University of Iowa - Henry B. Tippie College of Business

Claudine Mangen

Concordia University, Montreal - John Molson School of Business

Date Written: May 14, 2012

Abstract

We show that a firm’s investments are associated with the qualitative content of its rivals’ Management Discussion and Analysis (MD&A) disclosures: a firm invests more when its rivals’ MD&A disclosures are more optimistic. We also find that the sensitivity of a firm’s investments to its rivals’ qualitative MD&A content varies cross-sectionally: the association between the firm’s investments and the optimism in its rivals’ MD&A disclosures is stronger when MD&A disclosures are more certain, rivals are better governed and their industry is less concentrated. We conclude that qualitative MD&A disclosures contain useful information for corporate investments.

Keywords: MD&A, disclosure, investment

Suggested Citation

Durnev, Art and Mangen, Claudine, The Real Effects of Managerial Narratives: Evidence from a Quarter-Billion Words (May 14, 2012). Available at SSRN: https://ssrn.com/abstract=2062943 or http://dx.doi.org/10.2139/ssrn.2062943

Artyom Durnev (Contact Author)

University of Iowa - Henry B. Tippie College of Business ( email )

Acquisitions
5020 Main Library
Iowa City, IA 52242-1000
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HOME PAGE: http://www.artdurnev.com

Claudine Mangen

Concordia University, Montreal - John Molson School of Business ( email )

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Montreal, Quebec H3H 0A1
Canada
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+1 (514) 848 45 18 (Fax)

HOME PAGE: http://claudinemangen.com/

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