The Information Content of Discretionary Tone in Interim Management Statements
Bibliographic record
Abstract
This paper contributes to the literature on tone management by providing evidence that the discretionary tone of financial disclosures is more incrementally informative of future performance in the third quarter of the financial year than in the first quarter. Using a sample of Interim Management Statements (IMSs) from the period 2008 – 2013, I show that the discretionary tone provides incremental information about year-end earnings and cash flows in the third quarter but often provides noise in the first quarter, with no indication of strategic tone management over and above discretionary accruals. Additionally, in the third quarter, the discretionary tone of negative statements is incrementally informative of both year-end earnings and cash flows but the discretionary tone of positive statements is incrementally informative of year-end earnings only. In both the first and third quarters, the discretionary tone is positively associated with market returns at the time of IMS announcements. The market reaction two months after the IMS announcement is positively associated with the incrementally informative third-quarter discretionary tone, although it is unrelated to the noisier first-quarter discretionary tone. The results are sustained after a series of robustness tests.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.003 | 0.002 |
| Meta-epidemiology (narrow) | 0.001 | 0.001 |
| Meta-epidemiology (broad) | 0.001 | 0.000 |
| Bibliometrics | 0.003 | 0.004 |
| Science and technology studies | 0.003 | 0.004 |
| Scholarly communication | 0.001 | 0.009 |
| Open science | 0.004 | 0.009 |
| Research integrity | 0.000 | 0.002 |
| Insufficient payload (model declined to judge) | 0.001 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; both teacher heads agree on what is shown here.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".