ANALYST RELUCTANCE IN CONVEYING NEGATIVE INFORMATION TO THE MARKET

This paper investigates one of the main sources of financial markets’ public information: financial analysts’ reports. We analyze reports on S&P 500 index through a multidisciplinary approach integrating behavioral finance with linguistic analysis to understand how financial phenomena reflect in or are deviated by language, i.e. whether financial and linguistic trends follow the same patterns, boosting each other, or diverge. In the latter, language could conceal financial events, mitigating analysts’ feelings and misleading investors. Therefore, we attempt to identify behavioral biases (mainly represented by cognitive dissonances) present in analysts’ reports. In doing so, we try to understand whether analysts try to hide perception of negative price-sensitive events or not, eventually anticipating and controlling the market “mood”. The study focuses on how analysts use linguistic strategies in order to minimize their risk of issuing wrong advice. Our preliminary results show reluctance to incorporate negative information in the reports. A slight asymmetry between the use of positive/negative keywords taken into account and the negative/positive trends of the index seems to emerge. In those weeks characterized by the index poor performances, the frequency of keywords with a negative meaning is lower. On the contrary, in the recovering weeks a higher use of keywords with a positive meaning does not clearly appear. A thorough investigation on the market moods, and the analysis of the text of the reports enable us to assess if and to what extent analysts have been willing to mitigate pessimism or emphasize confidence. Furthermore, we contribute to the existing literature also proposing a possible analysts’ value function based on the Prospect Theory [Kahneman and Tversky, 1979] where analysts try to maximize the value deriving from enhancing their reputation, taking into account the risks that may cause a reputational loss. This theoretical framework supports our preliminary findings and supports the idea that analysts are risk-averse when facing reputational gains and risk-seeking in case of potential reputational losses

In Search of Meaning:Lessons, Resources and Next Steps for Computational Analysis of Financial Discourse

We critically assess mainstream accounting and finance research applying methods from computational linguistics (CL) to study financial discourse. We also review common themes and innovations in the literature and assess the incremental contributions of work applying CL methods over manual content analysis. Key conclusions emerging from our analysis are: (a) accounting and finance research is behind the curve in terms of CL methods generally and word sense disambiguation in particular; (b) implementation issues mean the proposed benefits of CL are often less pronounced than proponents suggest; (c) structural issues limit practical relevance; and (d) CL methods and high quality manual analysis represent complementary approaches to analyzing financial discourse. We describe four CL tools that have yet to gain traction in mainstream AF research but which we believe offer promising ways to enhance the study of meaning in financial discourse. The four approaches are named entity recognition, summarization, semantics and corpus linguistics

Doing well by talking good? A topic modelling-assisted discourse study of corporate social responsibility

Using the novel technique of topic modelling, this paper examines thematic patterns and their changes over time in a large corpus of corporate social responsibility (CSR) reports produced in the oil sector. Whereas previous research on corporate communications has been small-scale or interested in selected lexical aspects and thematic categories identified ex ante, our approach allows for thematic patterns to emerge from the data. The analysis reveals a number of major trends and topic shifts pointing to changing practices of CSR. Nowadays ‘people’, ‘communities’ and ‘rights’ seem to be given more prominence, whereas ‘environmental protection’ appears to be less relevant. Using more established corpus-based methods, we subsequently explore two top phrases - ‘human rights’ and ‘climate change’ that were identified as representative of the shifting thematic patterns. Our approach strikes a balance between the purely quantitative and qualitative methodologies and offers applied linguists new ways of exploring discourse in large collections of texts

Corporate financial disclosure measurement in the empirical accounting literature: a review article.

This paper develops a framework for corporate financial disclosure measurement to identify and evaluate common measures of financial disclosure employed in prior empirical accounting studies. It identifies two approaches: (i) a disclosure-based approach that investigates actual disclosure, operationalizes the concept of disclosure in terms of its main dimensions such as the quantity and quality of disclosure, and develops methods to measure them such as the disclosure index and textual analysis, and (ii) a non-disclosure-based approach that uses the values of some observable variables to proxy for disclosure such as market-based disclosure measures. The study also discusses some empirical challenges related to causal claims and the extent to which the reliability and validity of these different measures of disclosure are tested. The purposes of this review are (i) to help future researchers identify exemplars and select or develop their own suitable disclosure measures, and (ii) to identify measurement issues relating to corporate financial disclosure and provide avenues for future research

Managing Information System Integration Technologies--A Study of Text Mined Industry White Papers

Industry white papers are increasingly being used to explain the philosophy and operation of a product in marketplace or technology context. This explanation is used by senior managers for strategic planning in an organization. This research explores the effectiveness of white papers and strategies for managers to learn about technologies using white papers. The research is conducted by collecting industry white papers in the area of Information System Integration and gleaned relevant information through text-mining tool, Vantage Point. The text mined information is analyzed to provide solutions for practical problems in systems integration market. The indirect findings of the research are New System Integration Business Models, Methods for Calculating ROI of System Integration Project, and Managing Implementation Failures

On Automated Message Processing in Electronic Commerce and Work Support Systems: Speech Act Theory and Expressive Felicity

Electronic messaging, whether in an office environment or for electronic commerce, is normally carried out in natural language, even when supported by information systems. For a variety of reasons, it would be useful if electronic messaging systems could have semantic access to, that is, access to the meanings and contents of, the messages they process. Given that natural language understanding is not a practicable alternative, there remain three approaches to delivering systems with semantic access: electronic data interchange (EDI), tagged messages, and the development of a formal language for business communication (FLBC). We favor the latter approach. In this article we compare and contrast these three approaches, present a theoretical basis for an FLBC (using speech act theory), and describe a prototype implementation

Towards an authentic argumentation literacy test

A central goal of education is to improve argumentation literacy. How do we know how well this goal is achieved? Can we measure argumentation literacy? The present study is a preliminary step towards measuring the efficacy of education with regards to argumentation literacy. Tests currently in use to determine critical thinking skills are often similar to IQ-tests in that they predominantly measure logical and mathematical abilities. Thus, they may not measure the various other skills required in understanding authentic argumentation. To identify the elements of argumentation literacy, this exploratory study begins by surveying introductory textbooks within argumentation theory, critical thinking, and rhetoric. Eight main abilities have been identified. Then, the study outlines an Argumentation Literacy Test that would comprise these abilities suggested by the literature. Finally, the study presents results from a pilot of a version of such a test and discusses needs for further development