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Article
Publication date: 30 November 2023

Hesham Bassyouny and Michael Machokoto

This paper aims to investigate the association between negative tone in annual report narratives and future performance in the UK context. Under the principle-based approach in…

Abstract

Purpose

This paper aims to investigate the association between negative tone in annual report narratives and future performance in the UK context. Under the principle-based approach in the UK, managers tend to bias the tone of narrative reports upward, as the reporting regime is more flexible than the rule-based approach in the USA. Consequently, any negative disclosure not mandated by regulators conveys credible information about a firm’s prospects.

Design/methodology/approach

This paper uses a sample of UK FTSE all-share non-financial companies from 2010 to 2019. The authors use the textual-analysis approach based on Loughran and McDonald (2011)’s wordlist (LM) to measure the negative tone in UK annual reports.

Findings

The results show a significant negative association between negative tone and future performance. Moreover, our further analyses suggest that only the negativity in the executive section of the annual disclosures correlates significantly with future performance. In summary, this study suggests that negativity does matter under the principle-based approach and can be used as an indicator of future performance.

Originality/value

In contrast to the literature arguing that only positivity has the power to affect a firm’s outcomes under the principle-based approach, the authors provide new empirical evidence suggesting that negativity also matters within the UK context and can be used as an indicator for future performance. Also, to the best of the authors’ knowledge, this is the first study to identify which section of the annual report is more informative about a firm’s future performance.

Details

International Journal of Accounting & Information Management, vol. 32 no. 2
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 2 October 2023

Zhihao Qin, Menglin Cui, Jiaqi Yan and Jie Niu

This paper aims to examine whether managerial sentiment, extracted from annual reports, is associated with corporate risk-taking in the context of Chinese companies. This study…

Abstract

Purpose

This paper aims to examine whether managerial sentiment, extracted from annual reports, is associated with corporate risk-taking in the context of Chinese companies. This study expands the vein of literature on overconfidence theory.

Design/methodology/approach

By leveraging textual analysis on Chinese listed companies’ annual reports, the authors construct firm-level managerial sentiment during 2007 and 2021 to examine how managerial sentiment influences corporate risk-taking after control for firm characteristics. Corporate risk-taking is denoted by corporate investment engagements: capital expenditures and net fixed asset investment.

Findings

Results show that incentives for corporate risk-taking are likely to increase with the positive managerial sentiment and decrease with the negative sentiment in companies’ annual reports. Positive managerial sentiment is associated with over-/under-investment and low/high investment efficiency. Further additional tests show that the managerial sentiment effect only holds during low economic uncertain years and samples of private-owned firms. Furthermore, the robust tests indicate that there is no endogenous issue between managerial sentiment and corporate risk-taking.

Research limitations/implications

Annual report textual-based managerial sentiment may not perfectly reflect managers’ lower frequency sentiment (e.g. weekly, monthly and quarterly sentiment). Future studies could attempt to capture managers’ on-time sentiment by using media sources and corporate disclosures.

Practical implications

To the best of the authors’ knowledge, this paper is the first research to provide insights into supervising managers’ corporate decisions by observing their textual information usage in corporate disclosure. Moreover, the approach of measuring managerial sentiment might be a solution to monitoring managerial class.

Originality/value

This paper contributes to the literature on accounting and finance studies, adding another piece of empirical evidence on content analysis by examining a unique language and institutional context (i.e. China). Besides, the paper notes that in line with the English version disclosure, based on Chinese semantic words, managerial sentiment in the Chinese-speaking world has magnitude on corporate decisions. The research provides insights into supervising managers’ corporate decisions by observing their textual information usage in corporate disclosure. Moreover, the approach to measuring managerial sentiment may be a practical solution to monitoring managerial class.

Details

Management Research Review, vol. 47 no. 4
Type: Research Article
ISSN: 2040-8269

Keywords

Open Access
Article
Publication date: 26 March 2024

Eva Posch, Elena Eckert and Benni Thiebes

Despite the widespread use and application of resilience, much uncertainty about the conceptualization and operationalization in the context of tourism destinations still exists…

Abstract

Purpose

Despite the widespread use and application of resilience, much uncertainty about the conceptualization and operationalization in the context of tourism destinations still exists. The purpose of this paper is to provide a conceptual elaboration on destination resilience and to introduce a model for an improved understanding of the concept.

Design/methodology/approach

Taking a conceptual research approach, this paper seeks to untangle the fuzziness surrounding the destination and resilience concept by providing a new interpretation that synthesizes theories and concepts from various academic disciplines. It analyses the current debate to derive theoretic baselines and conceptual elements that subsequently inform the development of a new “Destination Resilience Model”.

Findings

The contribution advances the debate by proposing three key themes for future resilience conceptualizations: (1) the value of an actor-centered and agency-based resilience perspective; (2) the importance of the dynamic nature of resilience and the (mis)use of measurement approaches; (3) the adoption of a dualistic resilience perspective distinguishing specified and general resilience. Building on these propositions, we introduce a conceptual model that innovatively links elements central to the concepts of destination and risk and combines different narratives of resilience.

Originality/value

The contribution advances the debate surrounding destination resilience by critically examining the conceptualization and operationalization of destination resilience within previous research and by subsequently proposing a “Destination Resilience Model” that picks up central element of the three new frontiers identified in the conceptually driven review. The innovative integration strengthens the comprehension of the resilience concept at destination level and supports building future capacities to manage immediate adverse impacts as well as novel and systemic risks.

Details

Journal of Tourism Futures, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2055-5911

Keywords

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