Finding the Narrative in the Numbers: Long-Term Investors’ Demand for Accounting Information

50 Pages Posted: 24 Oct 2020

See all articles by Federico Siano

Federico Siano

Boston University Questrom School of Business

Date Written: August 10, 2020

Abstract

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

Siano, Federico, Finding the Narrative in the Numbers: Long-Term Investors’ Demand for Accounting Information (August 10, 2020). Available at SSRN: https://ssrn.com/abstract=3687213 or http://dx.doi.org/10.2139/ssrn.3687213

Federico Siano (Contact Author)

Boston University Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

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