• Market reaction to the positiveness of annual report narratives

      Yekini, Liafisu Sina; Wisniewski, Tomasz Piotr; Millo, Yuval; Coventry University (Elsevier, 2015-12-11)
      This paper focuses on narratives published by UK companies, defined here as the content of annual reports excluding financial statements and notes to accounts. We endeavour to gauge the tone of these narratives by recording the frequency of positive words appearing in the text. We show that the extent of positiveness is related to market reaction around the disclosure date. This conclusion is maintained even after controlling for the financial figures that are reported simultaneously and company-specific characteristics. Consequently, narratives should not be perceived as mere impression management tools, but also as conduits for disseminating price-sensitive information.
    • Psychopathic traits of corporate leadership as predictors of future stock returns

      Wisniewski, Tomasz Piotr; Yekini, Liafisu Sina; Omar, Ayman; Coventry University (Wiley, 2019-10-07)
      This paper examines whether it is possible to forecast one-year-ahead returns of individual companies based on the observed ‘psychopathic’ characteristics of their top management team. We find that language characteristic of psychopaths present in annual report narratives, questionable integrity, excessive risk-taking and failure to contribute to charitable undertakings tend to reduce future shareholder wealth. These findings imply that firms could benefit from incorporating psychological evaluation in their recruitment processes, especially when seeking to fill senior management posts. While the return predictability described in this paper supports the upper echelons perspective, it simultaneously challenges the notion of informationally efficient stock prices.