Different Time, Different Tone: Company Life Cycle

Journal of Contemporary Accounting and Economics, Forthcoming

50 Pages Posted: 2 Oct 2017 Last revised: 26 Oct 2018

See all articles by Kathleen Bakarich

Kathleen Bakarich

Hofstra University - Department of Accounting, Taxation and Legal Studies in Business

Mahmud Hossain

University of Memphis - Fogelman College of Business and Economics

Mahmud Hossain

King Fahd University of Petroleum & Minerals - Department of Accounting and MIS

Joseph Weintrop

City University of New York - Baruch College - Stan Ross Department of Accountancy

Date Written: October 24, 2018

Abstract

This paper examines how the qualitative characteristics of annual reports vary across different phases of the corporate life cycle. We measure the complexity, tone, and sentiment of 10-Ks, and classify firms into their distinct life cycle phases. Considering a sample of 24,268 firm-year observations from 2000–2014, we find that each of the life cycle indicators is a determinant of different textual characteristics. The results show that firms’ 10-K disclosures become less complex, less ambiguous, and more optimistic as they progress from the introduction to the maturity stage. Clarity and readability peak at the maturity level, prior to firms entering the final decline stage, characterized by the most negative and ambiguous disclosures. This paper provides timely evidence to regulators and investors on the circumstances under which firms provide qualitatively different disclosures and shows that the textual characteristics of firm disclosure are not static over life cycle stages.

Keywords: Qualitative Disclosure, Firm Life Cycle, 10-K, Textual Characteristics

JEL Classification: L21, M41

Suggested Citation

Bakarich, Kathleen and Hossain, Mahmud and Hossain, Mahmud and Weintrop, Joseph, Different Time, Different Tone: Company Life Cycle (October 24, 2018). Journal of Contemporary Accounting and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3044464 or http://dx.doi.org/10.2139/ssrn.3044464

Kathleen Bakarich (Contact Author)

Hofstra University - Department of Accounting, Taxation and Legal Studies in Business ( email )

United States

Mahmud Hossain

University of Memphis - Fogelman College of Business and Economics ( email )

Memphis, TN 38152
United States

Mahmud Hossain

King Fahd University of Petroleum & Minerals - Department of Accounting and MIS ( email )

Department of Accounting and MIS
College of Industrial Management. KFUPM Box 5076
Dhahran, 31261
Saudi Arabia
+966 13 860 8496 (Phone)
+966 13 860 3489 (Fax)

HOME PAGE: http://www4.kfupm.edu.sa/cim/acct_mis.html

Joseph Weintrop

City University of New York - Baruch College - Stan Ross Department of Accountancy ( email )

One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States
212-802-6443 (Phone)
212-802-6423 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
39
Abstract Views
783
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information