Research On The Nonlinear Relationship Between Management Tone And Expected Earnings

With the great progress of computer technology,financial text information has attracted the attention of researchers in recent years.At present,the research on financial text information mainly includes text structure,text readability,text tone and so on.The section of management discussion and analysis in the text information in the annual report is a summary of the company’s current performance,forecasts of future earnings,and the company’s future strategic deployment.These contents can provide decision-making information to external information users.The range of financial text information is also very wide,including not only management discussions and analysis,but also conference calls,performance briefings,company announcements,etc.,and even analyst reports and regulatory agency reports can also provide effective information.Due to the dependence of the text on the environment,the same Chinese can even have different meanings in different contexts.The amount of information that Chinese can give to the text must be much more than that of English.The amount of information and the miscellaneous also make it difficult for the information conveyed by the Chinese text to be applied to my country’s current capital market.Among the current Chinese and foreign studies on corporate disclosure texts,researchers have inconsistent views on the management tone obtained from these textual information.On the one hand,many scholars believe that the information transmitted by the management is invalid,it is a speculative behavior of the management,and it is the behavior of the management to use the information advantage to disrupt the market,which makes the transmission of the management text information become a problem.On the other hand,there are also many scholars who believe that the textual information in management disclosure is considered as a valid textual information.Management’s disclosure aimed at improving investor confidence can effectively reduce the information asymmetry between investors and management,and some scholars believe that it can also predict the future performance of enterprises.In previous studies,management tone and earnings are generally considered to be linear.Earnings expectations are introduced in this paper.There are mainly two types of earnings.One is that the indicators constructed by the company’s disclosed net profit after deducting non-recurring gains and losses can represent the actual performance of the company,and the other is that the indicators constructed by using analysts’ forecasts can represent the market’s reaction.We found that management’s tone began to turn when earnings met expectations,that is,the tone began to weaken when earnings met expectations.This is mainly due to the main purpose of management’s actions to maintain investor confidence driven by investor confidence.Decreasing the tone of enthusiasm when earnings meet expectations in order to reduce the market’s expectations for the company’s future makes it easier for the company to meet future expectations.After that,we selected several influencing factors such as management’s occupational concerns,litigation risk,and accounting conservatism.The study found that accounting conservatism and management’s occupational concerns would increase the degree of management’s tone slowdown when earnings reached expectations.Maintaining investor confidence increases negative tone to lower investor expectations.However,the litigation risk has contradictory results under the two types of earnings.We speculate that the litigation risk may not have a significant impact on the relationship between management tone and expected earnings.The findings of this paper extend the related research on information disclosure.The research results show that because the management is the dominant party of information,its information transmission behavior is difficult to be detected.Management disclosures have likely become a tool for management to communicate information to the market.In addition,we also used the overall text tone of the annual report and the text tone of the performance briefing to verify the research results.The results show that the overall tone of the annual report and the tone of the performance briefing session under the annual report surplus will also respond in the same way.Our findings have broad contributions to studies of managerial tone and management’s disclosure strategies,as well as studies of the interplay between qualitative and quantitative information.