IDEAS home Printed from https://ideas.repec.org/a/bla/abacus/v60y2024i3p578-606.html
   My bibliography  Save this article

Asymmetric Tone in Management Discussion and Analysis and Its Impact: Evidence from the Chinese Stock Market

Author

Listed:
  • Sibei Yan
  • Ahrum Choi
  • Hyung Rok Jung
  • Joonil Lee

Abstract

This paper investigates the relationship between managerial tone in management discussion and analysis (MD&A) disclosures and stock price crash risk. We make a distinction between two types of tone—concave and convex—based on how managers’ tone changes according to whether performance is good or bad. Tone is classified as ‘concave’ (‘convex’) when managers overstate (understate) bad news and understate (overstate) good news. Using data on Chinese listed firms from 2013 to 2018, we find that convex tone is positively associated with stock price crash risk, and negatively associated with future performance. The positive relationship between convex tone and stock price crash risk is more pronounced for firms with high free cash flow, opaque financial reporting, and non‐stated‐owned enterprises. These results suggest that the use of a convex tone in MD&A may have a negative impact on the capital market.

Suggested Citation

  • Sibei Yan & Ahrum Choi & Hyung Rok Jung & Joonil Lee, 2024. "Asymmetric Tone in Management Discussion and Analysis and Its Impact: Evidence from the Chinese Stock Market," Abacus, Accounting Foundation, University of Sydney, vol. 60(3), pages 578-606, September.
    • Handle: RePEc:bla:abacus:v:60:y:2024:i:3:p:578-606
    DOI: 10.1111/abac.12320
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/abac.12320
    Download Restriction: no
    File URL: https://libkey.io/10.1111/abac.12320?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:abacus:v:60:y:2024:i:3:p:578-606. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0001-3072 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.