Beyond the Numbers: Measuring the Information Content of Earnings Press Release Language *

Beyond the Numbers: Measuring the Information Content of Earnings Press Release Language * 1. Introduction Earnings press releases are “the major news event of the season for many companies as well as investors, analysts, financial media, and the market” ( Mahoney and Lewis 2004 ). The information content of earnings press releases has increased significantly over time ( Kross and Kim 2000 ; Lo and Lys 2001 ; Francis, Schipper, and Vincent 2002a, 2002b ; Landsman and Maydew 2002 ; Collins, Li, and Xie 2005 ) and has been accompanied by a corresponding increase in press release length. Specifically, the number of words used in earnings press releases increased approximately five times between 1980 and 1999 ( Francis et al. 2002b ). This trend continued over our sample period, with median earnings press release length increasing to more than 1,700 words by 2003, a greater than 90 percent increase from 1998. This dramatic increase in the sheer number of words used in earnings press releases suggests an important question: Does the language used throughout an earnings press release provide a signal regarding managers’ expectations about future performance? If so, does the market respond to this information? Earnings press releases are characterized as a disclosure mechanism revealing a “package of information” to http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Contemporary Accounting Research Wiley

Beyond the Numbers: Measuring the Information Content of Earnings Press Release Language *

Loading next page...
 
/lp/wiley/beyond-the-numbers-measuring-the-information-content-of-earnings-press-FQyFt8BFHu
Publisher
Wiley Subscription Services, Inc., A Wiley Company
Copyright
© 2011 The Canadian Academic Accounting Association
ISSN
0823-9150
eISSN
1911-3846
D.O.I.
10.1111/j.1911-3846.2011.01130.x
Publisher site
See Article on Publisher Site

Abstract

1. Introduction Earnings press releases are “the major news event of the season for many companies as well as investors, analysts, financial media, and the market” ( Mahoney and Lewis 2004 ). The information content of earnings press releases has increased significantly over time ( Kross and Kim 2000 ; Lo and Lys 2001 ; Francis, Schipper, and Vincent 2002a, 2002b ; Landsman and Maydew 2002 ; Collins, Li, and Xie 2005 ) and has been accompanied by a corresponding increase in press release length. Specifically, the number of words used in earnings press releases increased approximately five times between 1980 and 1999 ( Francis et al. 2002b ). This trend continued over our sample period, with median earnings press release length increasing to more than 1,700 words by 2003, a greater than 90 percent increase from 1998. This dramatic increase in the sheer number of words used in earnings press releases suggests an important question: Does the language used throughout an earnings press release provide a signal regarding managers’ expectations about future performance? If so, does the market respond to this information? Earnings press releases are characterized as a disclosure mechanism revealing a “package of information” to

Journal

Contemporary Accounting ResearchWiley

Published: Sep 1, 2012

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create lists to
organize your research

Export lists, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off