Textual Opinion in Analyst Reports

31 Pages Posted: 26 Jul 2018 Last revised: 8 Nov 2018

See all articles by Kotaro Miwa

Kotaro Miwa

Tokio Marine Asset Management

Date Written: July 26, 2018


A large body of research studies shows that the quantitative outputs of analyst reports (e.g., earnings forecasts and recommendations) have informational value. In this study, by analyzing the textual tone of headlines in analyst reports, I reveal that textual opinion in the reports – a representative qualitative output – contains incremental information that has a significant impact on stock prices. The analysis reveals that stock prices react considerably to the report tone. In addition, economically and statistically significant price drifts, indicating price underreaction, are observed in cases of negative report tone. However, these price behaviors are relatively weak when the report tone is used to support quantitative measures. In sum, textual opinion in reports by itself provides value-relevant information, especially when textual opinion is used to provide independent information.

Keywords: Financial analyst, Textual analysis, Report tone, Information content

JEL Classification: G10, G14

Suggested Citation

Miwa, Kotaro, Textual Opinion in Analyst Reports (July 26, 2018). 31st Australasian Finance and Banking Conference 2018, Available at SSRN: https://ssrn.com/abstract=3220224 or http://dx.doi.org/10.2139/ssrn.3220224

Kotaro Miwa (Contact Author)

Tokio Marine Asset Management ( email )

1-3-1, Marunouchi
81332128186 (Phone)

HOME PAGE: http://sites.google.com/site/kotmiwa/

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