Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10489282 | Accounting Forum | 2015 | 14 Pages |
Abstract
This paper uses the tools of computational linguistics to analyze the qualitative part of annual reports of UK listed companies. More specifically, the frequency of words associated with different language indicators is used to forecast future stock returns. We find that two of these indicators, capturing 'activity' and 'realism', predict subsequent price increases, even after controlling for a wide range of factors. Elevated values of these two linguistic variables, however, are not symptomatic of exacerbated risk. Consequently, investors are advised to peruse annual report narratives, as they contain valuable information that may not yet have been discounted in the prices.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Tomasz Piotr Wisniewski, Liafisu Sina Yekini,