Linguistic tone and the small trader

• Published in: Accounting, organizations and society Vol. 68-69; pp. 21 - 37
• Main Authors: Baginski, Stephen P., Demers, Elizabeth, Kausar, Asad, Yu, Yingri Julia
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.07.2018
• Subjects: Behavioral finance; Cheap talk; Information processing skills; Investor disagreement; Linguistic tone; Management forecast; Optimism; Small trader; Voluntary disclosure; Small trader; Investor disagreement; Management forecast; Information processing skills; Linguistic tone; Voluntary disclosure; Cheap talk; Behavioral finance; Optimism

Management-issued linguistic tone is, on average, positively associated with future earnings and incrementally priced by the market. However, prior capital markets research also shows that linguistic tone is difficult to process, while lab-based findings establish that less sophisticated investors a...