The Structure of Voluntary Disclosure Narratives: Evidence from Tone Dispersion
46 Pages Posted: 7 Jan 2014 Last revised: 5 Feb 2015
Date Written: December 15, 2014
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 positive and negative tone dispersion are 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.
Keywords: voluntary disclosure, conference calls, narrative structure, tone, analysts
JEL Classification: M41, M49, G30
Suggested Citation: Suggested Citation