Matthew D. DeAngelis

Bio: Matthew D. DeAngelis is an academic researcher from Georgia State University. The author has contributed to research in topics: Tone (literature) & Voluntary disclosure. The author has an hindex of 6, co-authored 9 publications receiving 259 citations. Previous affiliations of Matthew D. DeAngelis include J. Mack Robinson College of Business.

The structure of voluntary disclosure narratives: : Evidence from tone dispersion

Abstract: We examine tone dispersion, or the degree to which tone words are spread evenly within a narrative, to evaluate whether narrative structure provides insight into managers’ voluntary disclosures and users’ responses to those disclosures. We find that tone dispersion is associated with current aggregate and disaggregated performance and future performance, managers’ financial reporting decisions, and managers’ incentives and actions to manage perceptions. Furthermore, we find that tone dispersion is associated with analysts’ and investors’ responses to conference call narratives. Our results suggest that tone dispersion both reflects and affects the information that managers convey through their narratives.

The Structure of Voluntary Disclosure Narratives: Evidence from Tone Dispersion

Abstract: We examine tone dispersion, or the degree to which tone words are spread evenly within a narrative, to evaluate whether narrative structure provides insight into managers’ voluntary disclosures and users’ responses to those disclosures. We find that positive and negative tone dispersion are associated with current aggregate and disaggregated performance and future performance, managers’ financial reporting decisions and managers’ incentives and actions to manage perceptions. Furthermore, we find that tone dispersion is associated with analysts’ and investors’ responses to conference call narratives. Our results suggest that tone dispersion both reflects and affects the information that managers convey through their narratives.

Does Accounting Conservatism Discipline Qualitative Disclosure? Evidence From Tone Management in the MD&A*

Abstract: We investigate whether accounting conservatism, which has been found to be effective in constraining management opportunism in other settings, constrains upward tone management (UTM) in the Management's Discussion and Analysis (MD&A) portion of the 10‐K filing. We hypothesize that conservatism makes it harder for managers to opportunistically downplay bad news and magnify good news when discussing current performance. Consistent with this hypothesis, we find that UTM is negatively associated with several accounting conservatism proxies. Additionally, we hypothesize and find that this association is stronger for firms where managers have higher incentives to manipulate tone. In supplemental analyses, we find evidence to suggest that our results are not due to an endogenous relationship between conservatism and UTM. We also find that conservatism neither encourages downward tone management (DTM) nor constrains managers from conveying real information about future good news. Together, our results suggest that accounting conservatism improves disclosure narratives. La prudence comptable regit‐elle l'information qualitative? Donnees relatives a la gestion du ton adopte dans le rapport de gestion Les auteurs se demandent si la prudence comptable, dont l'efficacite a fait ses preuves dans d'autres contextes pour ce qui est de contenir l'opportunisme de la direction, freine la propension a positiver le ton (upward tone management — UTM) dans le rapport de gestion. Ils posent l'hypothese selon laquelle la prudence fait en sorte qu'il est plus difficile pour les gestionnaires d'edulcorer les nouvelles lorsqu'elles sont mauvaises et de les magnifier lorsqu'elles sont bonnes par opportunisme dans l'analyse de la performance actuelle de l'entreprise. Conformement a cette hypothese, les auteurs constatent l'existence d'un lien negatif entre l'UTM et plusieurs indicateurs de prudence comptable. De plus, ils formulent et confirment l'hypothese selon laquelle ce lien est plus fort dans le cas des entreprises dont les gestionnaires sont davantage encourages a manipuler le ton de leurs interventions. Des analyses complementaires semblent indiquer que ces resultats ne sont pas attribuables a une relation endogene entre la prudence et l'UTM. Les auteurs observent egalement que la prudence n'a pour effet ni d'augmenter la propension a edulcorer le ton (downward tone management — DTM), ni d'empecher les gestionnaires de communiquer de l'information reelle au sujet des bonnes nouvelles a venir. Dans leur ensemble, les resultats de l'etude laissent croire que la prudence comptable ameliore le compte rendu descriptif de l'information.

Skin in the game: personal stock holdings and investors’ response to stock analysis on social media

Abstract: Motivated by concerns that financial positions impair analyst objectivity, we examine investor perceptions of the financial positions of nonprofessional analysts (hereafter NPAs) writing on the social media outlet Seeking Alpha. We find that NPA positions contribute directly to short-window returns surrounding the article’s publication, holding constant the information in the article as well as contemporaneously issued news from professional analysts, managers, and the business press. Contrary to concerns that stock positions are associated with biased analysis, we find no evidence that NPA positions reduce investor responses to the tone of the article. In fact, our evidence suggests that holding a position magnifies investor responses to both positive and negative tone, although this effect is limited to tone that is contrary to the NPA’s stock position. Overall, our findings suggest that, contrary to regulators’ concerns, NPA stock positions do not decrease the credibility and informativeness of their analyses.

Skin in the Game: Personal Stock Holdings and Investors’ Response to Stock Analysis on Social Media

Abstract: Motivated by concerns that financial positions present a conflict of interest that impairs an analyst’s objectivity, we examine investor perceptions of the financial positions of non-professional analysts (hereafter NPAs) providing stock analysis on the social media outlet SeekingAlpha (hereafter SA) and offer two primary findings. First, NPA positions contribute directly to short-window returns surrounding the article’s publication, holding constant the information in the article (i.e., tone, length, rigor, numerical content, etc.) as well as contemporaneously issued news (i.e., from professional analysts, managers, and the business press). Economically, disclosure of a long position by an NPA corresponds to a positive 2-day return of 0.4 percent, while disclosure of a short position corresponds to a -1.2 percent return over the same period. These findings suggest that an NPAs stock positions convey information to investors. Second, contrary to concerns that stock positions are associated with biased analysis, we find no evidence that NPA positions reduce investor responses to the tone of the article. In fact, our evidence suggests that holding a position magnifies investor responses to both positive and negative tone, and these effects seem to be primarily driven by tone that is contrary to the NPA’s stock position. Overall, our findings suggest that, contrary to regulators’ concerns, stock positions of non-professional analysts do not decrease the credibility and informativeness of their analyses.

Textual Analysis in Accounting and Finance: A Survey

Abstract: Relative to quantitative methods traditionally used in accounting and finance, textual analysis is substantially less precise. Thus, understanding the art is of equal importance to understanding the science. In this survey, we describe the nuances of the method and, as users of textual analysis, some of the tripwires in implementation. We also review the contemporary textual analysis literature and highlight areas of future research.

Textual Analysis in Accounting and Finance: A Survey

Abstract: Relative to quantitative methods traditionally used in accounting and finance, textual analysis is substantially less precise Thus, understanding the art is of equal importance to understanding the science In this survey we describe the nuances of the method and, as users of textual analysis, some of the tripwires in implementation We also review the contemporary textual analysis literature and highlight areas of future research

The Role of Dissemination in Market Liquidity: Evidence from Firms' Use of Twitter

Abstract: Firm disclosures often reach only a portion of investors, which results in information asymmetry among investors, and therefore lower market liquidity. This issue is particularly salient for firms that are not highly visible, as they tend not to receive broad news dissemination via traditional intermediaries, such as the press. This paper examines whether firms can reduce information asymmetry by more broadly disseminating their news. To isolate the impact of dissemination, we focus our analysis on firms' use of Twitter and exploit the 140-character message restriction. Specifically, using a sample of technology firms, we examine the impact of using Twitter to send market participants links to press releases that are provided via traditional disclosure methods. We find this additional dissemination of firm-initiated news via Twitter is associated with lower abnormal bid-ask spreads and greater abnormal depths, consistent with a reduction in information asymmetry. Moreover, this result holds mainly for firms that are not highly visible, consistent with them being in greater need of this additional dissemination channel. We also examine the impact of dissemination on a volume-based measure of liquidity, and find that dissemination is positively associated with liquidity.

Incorrect Inferences When Using Residuals as Dependent Variables

Abstract: We analyze a procedure common in empirical accounting and finance research where researchers use ordinary least squares to decompose a dependent variable into its predicted and residual components and use the residuals as the dependent variable in a second regression. This two‐step procedure is used to examine determinants of constructs such as discretionary accruals, real activities management, discretionary book‐tax differences, and abnormal investment. We show that the typical implementation of this procedure generates biased coefficients and standard errors that can lead to incorrect inferences, with both Type I and Type II errors. We further show that the magnitude of the bias in coefficients and standard errors is a function of the correlations between model regressors. We illustrate the potential magnitude of the bias in accounting research in four commonly used settings. Our results indicate significant bias in many of these settings. We offer three solutions to avoid the bias.

The Evolving Disclosure Landscape: How Changes in Technology, the Media, and Capital Markets Are Affecting Disclosure

Abstract: Recent changes in technology and the media are causing significant changes in how capital markets assimilate and respond to information. We identify important themes in the disclosure literature and use this as a framework to discuss the conference papers that appear in this volume. These papers examine how managers’ disclosure practices are being affected by changes in technology, the media, and capital markets. While this work makes important progress, we discuss how continuing technological change and the emergence of new forms of media offer further opportunities for research on the role of disclosure in capital markets.