IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/akt2c_v1.html
   My bibliography  Save this paper

Imprecise and Informative: Lessons from Market Reactions to Imprecise Disclosure

Author

Listed:
  • Cookson, J. Anthony
  • Moon, S. Katie
  • Noh, Joonki

Abstract

Imprecise language in corporate disclosures can convey valuable information on ?firms' fundamentals during uncertain times. To evaluate this idea, we develop a novel measure of linguistic imprecision based on sentences marked with the \weasel tag" on Wikipedia. For a 10-week window following the 10-K disclosure, we ?nd that the use of imprecise language in 10-Ks predicts 1) positive and non-reverting abnormal returns, 2) improvements to stock liquidity, 3) greater intensities of insider and informed buying, and 4) higher news sentiment. These fi?ndings are the strongest when the fi?rm disclosures are more forward looking, and for fi?rms with greater idiosyncratic volatility. Taken together, our fi?ndings imply that the imprecise language in 10-Ks contains new information on positive but yet immature prospects of future cash flow.

Suggested Citation

  • Cookson, J. Anthony & Moon, S. Katie & Noh, Joonki, 2020. "Imprecise and Informative: Lessons from Market Reactions to Imprecise Disclosure," SocArXiv akt2c_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:akt2c_v1
    DOI: 10.31219/osf.io/akt2c_v1
    as

    Download full text from publisher

    File URL: https://osf.io/download/5fcd390daa60b80307899a4f/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/akt2c_v1?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:osf:socarx:akt2c_v1. 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: OSF (email available below). General contact details of provider: https://arabixiv.org .

    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.