Mandatory Disclosure Tone and Bank Risk-taking: Evidence from Europe

Posted: 17 Jun 2019 Last revised: 29 Dec 2019

See all articles by Belinda Laura Del Gaudio

Belinda Laura Del Gaudio

University Parthenope of Naples

Amith Megaravalli

MYRA School of Business

Gabriele Sampagnaro

University of Naples Parthenope

Vincenzo Verdoliva

University of Naples "Parthenope"

Date Written: June 7, 2019

Abstract

We examine the relationship between the tone of mandatory disclosures and bank risk insolvency to determine what this qualitative information may reveal about bank stability. By using text analysis and the context-specific text dictionaries of Loughran and McDonald, we find that qualitative information collected in a negative tone helps explain bank risk insolvency. This finding suggests that qualitative information through the mandatory disclosure tone could be used to detect the communication among banks, the market and supervisors.

Keywords: Text analysis, Bank stability, Tone management

JEL Classification: G21, G24, G33

Suggested Citation

Del Gaudio, Belinda Laura and Megaravalli, Amith and Sampagnaro, Gabriele and Verdoliva, Vincenzo, Mandatory Disclosure Tone and Bank Risk-taking: Evidence from Europe (June 7, 2019). Available at SSRN: https://ssrn.com/abstract=3400876

Belinda Laura Del Gaudio

University Parthenope of Naples ( email )

via generale Parisi 13
via Acton 38
naples, Naples 80133
Italy

Amith Megaravalli

MYRA School of Business ( email )

Near Infosys, Koorgalli
MYSORE, Karnataka 571130
India

Gabriele Sampagnaro

University of Naples Parthenope ( email )

Via Ammiraglio Ferdinando Acton, 38
Via Generale Parisi, 13
Naples, 80133
Italy

Vincenzo Verdoliva (Contact Author)

University of Naples "Parthenope" ( email )

Via generale parisi
Naples, Naples 80133
Italy

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