Faculty Publications

Title

Do changes in MD&A section tone predict investment behavior?

Document Type

Article

Journal/Book/Conference Title

Financial Review

Volume

57

Issue

1

First Page

129

Last Page

153

Abstract

We find that changes in managerial tone predict firm corporate investment activities. Tone changes within the Management Discussion and Analysis section of the 10-K are positively related to subsequent capital investments and M&A activity. We find the predictive content of tone changes to be present at the firm and industry-levels, and when accounting for alternative sources of incremental information associated with firm investment activities. Our findings broaden the scope of information encapsulated by changes in financial statement tone.

Department

Department of Finance

Original Publication Date

2-1-2022

DOI of published version

10.1111/fire.12280

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