Finding the Narrative in the Numbers: Long-Term Investors’ Demand for Accounting Information
50 Pages Posted: 24 Oct 2020
Date Written: August 10, 2020
I study the MD&A section of 10-K filings and use disclosed numbers within the text of corporate narratives to proxy for the qualities of information that are demanded by long-term investors. I hypothesize and show that the prevalence of quantitative information in firms’ written communication is strongly and positively linked to long-term institutional ownership. Numbers capture a dimension of business communication that is opposite in direction to a short-term disclosure horizon. Exploiting language that surrounds numbers, I study topical narratives that are directly related to firm value and confirm the importance of numeric information to long-term shareholders in the relevant contexts of investment and forward-looking sentences.
Keywords: Disclosure, Long-Term Investors, Quantitative Information, Textual Analysis
JEL Classification: G23, G32, G11, M41, G14
Suggested Citation: Suggested Citation