Abstract
This paper examines the relationship between the fund managers' tones and future fund performance based on the Chinese mutual fund data. Using the textual analysis method to construct the tone measures of funds' periodic reports, we find that the tone in a fund report is a positive predictor of the fund performance. Funds with positive tones outperform those with negative tones by 2.4% per year on Fama-French three-factor alpha. Differences in fund managers' abilities drive this performance gap: Fund managers with positive tones have stronger stock-picking abilities. We also investigate the influencing factors of fund managers' tones and investors' reactions to managers' tones. Our findings suggest that the tones of funds' reports are informative for investors.
Published Version
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