Management Tone Dispersion And Its Impact On Analyst Optimism Bias

Management Discussion and Analysis(MD&A)is "heart and soul"of listed company's financial report,not only the core of non-financial information,but also a narrative explanation about company performance.It describes marketing performance,finance state and cash flow qualitatively,and it is also a useful complement to the financial statements.Tone dispersion,means tone concentration and the average degree of tone(positive or negative)distribution in the text,the lower the tone concentration,the higher the average degree of tone distribution,the higher the tone dispersion.How to distribute tone words,as an information disclosure strategy,the management may use it to disclose company performance in the MD&A,in order to affect financial report users.This passage analyzes MD&A text on the perspective of narrative structure,it is based on the principal-agent theory,asymmetric information theory,mental accounting theory and impression management theory and aimed to study how management describes company performance,in other words,chooses to concentrate or distribute tone words,in order to influence and control information receivers' perception and impression.Then the paper further studies whether management tone dispersion strategy influences analyst optimism bias under different company performances.MD&A of A—share listed companies in manufacturing industry between 2010 and 2014 is the study sample of this passage.The paper studies management tone dispersion strategy and its impact on analyst optimism bias empirically,followings are conclusions:(1)When company performance is very good,the management has no motivation to use tone dispersion strategy,so the relationship between tone dispersion and company performance is not significant.(2)When company performance is very bad,the management may use tone dispersion strategy to influence receivers' perception and impression.(3)Tone dispersion has an impact on analyst optimism bias.When company performance is very good,positive tone dispersion reduces analyst optimism bias;When company performance is very bad,positive tone dispersion increases analyst optimism bias,negative tone dispersion has no impact on analyst optimism bias.Finally,this paper summarizes research conclusions,and put forward several suggestions about management tone dispersion strategy based on the theoretical and empirical analysis.Besides,the paper expounds the future research directions.