Linguistic Tone Research Articles

Toward a Push-Pull Model of Leader Sensegiving During Crisis: A Content Analysis of United Nations Security Council Communications

Leader sensegiving during crisis situations has received limited empirical research attention in the management and organization literature, despite the important role it plays in addressing organizational crises. This study examines how the tone of leader sense-giving messages changes as crises unfold, so as to provide a point of departure for future research assessing the efficacy of sense-giving efforts amid crises. Toward this end, I develop a conceptual push-pull model of leader sensegiving in crisis, then test key relationships between crisis conditions, sensegiving activity, and leader message tone. Analysis of a sample of United Nations Security Council presidential statements suggests that increased leader sensegiving activity is associated with worsening crisis conditions and that leader messages tend to adopt a linguistic tone that is visceral and steeped in language that references forceful action when the intensity of crisis conditions is high. Furthermore, leader messages addressing deteriorating crises are associated with relatively high levels of exclusionary, aggressive language but low levels of collectiveness and praise. Directions for future leader sense-giving in crisis research are also discussed.

Storytelling changes the content and perceived value of event memories

Memories are not only stored for personal recall, but also to communicate knowledge to others in service of adaptive decision-making. Prior research shows that goals to share information can change which content is communicated in memory as well as the linguistic style embedded in this communication. Yet, little is known as to how communication-related alterations in memory narration drive differences of value processing in listeners. Here, we test how memory communication alters multi-featural recall for complex events and the downstream consequence on value estimations in naïve listeners. Participants recalled a memory of playing an exploratory videogame at a 24-h delay under instructions to either share (i.e., social condition) or recall (i.e., control condition) their memory. Sharing goals systematically altered the content and linguistic style of recall, such that narrators from the social condition were biased towards recall of non-episodic details and communicated their memories with more clout, less formality, and less authenticity. Across two independent samples of naïve listeners, these features differentially influenced value estimations of the video game. We found that greater clout was associated with greater enjoyment while listening to memories (hedonic value), and that greater inclusion of non-episodic details resulted in greater willingness to purchase the video game (motivational drive). These findings indicate that sharing an experience as a story can change the content and linguistic tone of memory recall, which in turn shape perceived value in naïve listeners.

Linguistic tone in Chinese rap: an interdisciplinary approach

This study, integrating linguistics, computer science, statistics, musicology, and cultural study, explores how the lexical tones of Mandarin Chinese interact with rap music. We develop an algorithm to compute the Tonal Congruence Index (ITG ), measuring the extent to which tones are preserved in vocal music. Analysis of a dataset with over 8000 syllables from Mandarin Chinese rap songs shows that the tonal congruence is related to subgenres that have evolved over time: while tones are largely preserved in the earlier boom-bap style, tonal distortion occurs more frequently in recent trap music. Moreover, we find that the falling fourth tone in standard Mandarin accounts for 38% of line-ending syllables in the lyrics of 140 rap songs and further suggests that the pre-eminence of the fourth tone may be a generic feature of Mandarin Chinese rap, particularly in boom bap. In addition, Chinese rappers have increasingly utilised English words over time to achieve musical flow. Integrating analytic findings with qualitative interviews of five national award-winning Chinese rappers, we conclude that the restriction of linguistic tones in Mandarin Chinese rap has gradually weakened over time and that there is a decreasing correlation between tone and rap with the emergence of new rap styles such as mumble rap and melodic rap.

The Role of Consumer Speech Acts in Brand Activism: A Transformative Advertising Perspective

Transformative advertising research (TAR) suggests examining advertising’s transformational possibilities via the interactions between institutional actors at each marketing level to gauge its effect on society. We employ rhetorical institutionalism as a lens to examine the online speech acts of consumers as they respond to a brand activism campaign focusing on an environmental problem. Our data take the form of written comments by YouTube users and employ a research design using automated text analysis and qualitative thematic data analysis. Our contributions to TAR are threefold. First, we offer a preliminary conceptualization of the role of consumer language as rhetorical institutional work to advance TAR scholars and practitioners’ insight. Second, we highlight the role of linguistic tone and clout in giving speakers agency through which consumers as institutional actors create, maintain, and disrupt institutional logics and practices. Finally, we develop a tripartite classification of consumer speech acts used to support brand activism. We label these activist warriors, brand champions, and conscious consumers as typologies that deepen understanding of how consumers’ online speech may amplify brand activism, thereby contributing to advertising’s transformative outcomes. We conclude by outlining important managerial implications including how practitioners can adopt the tripartite classification to enhance brand activism campaigns.

Uncertain tone, asset volatility and credit default swap spreads

We examine the relationship between uncertain linguistic tone and credit default swap (CDS) spreads. Using an event study approach, we first show that uncertain linguistic tone in 10-Q/K filings is positively associated with CDS spread changes incremental to positive and negative tone and incremental to the response implied by equity market reactions to the same information. We further demonstrate that the relationship of uncertain tone to CDS spreads manifests largely through its impact on asset volatility. We show that this effect is driven by firms with high leverage and is stronger among firms with shorter relative to longer maturities. Our findings contribute to growing research into credit market reactions to non-quantitative information by demonstrating a positive relationship between credit market responses and uncertainty disclosure language, and that this relationship is mediated by investors’ implied asset volatility estimates.

Credibility Signals from Soft Information: Evidence from Investor Reactions to Tone in Earnings Conference Calls

Research assigns significant share price relevance to linguistic tone in earnings conference calls. Tone is, however, only one facet in the mosaic of the soft information that is disseminated in the interactive conference call setting. We argue that investors exploit further aspects of this soft information to simultaneously assess the tone’s credibility. Drawing on the communication literature, we focus on the role of perceived sender and message credibility in conference calls in altering investor reactions to tone. We measure sender credibility as the trustworthiness originating from the manager’s perceived personality (i.e., Big 5 traits), and message credibility as characteristics of a credible communication style and structure. We find corroborating evidence that investor reactions to tone are stronger in the presence of higher sender and message credibility. We also find the credibility effect to be stronger in weaker information environments, where we expect the reliance on simultaneously perceived credibility signals from soft information to be higher. Finally, we find that sender and message credibility strongly attenuate the negative post-conference-call drift in the investor reaction to tone. Our results provide evidence that investors benefit from considering credibility signals from the simultaneously perceived soft information when reacting to tone in conference calls.

Managerial tone and investors' hedging activities: Evidence from credit default swaps

AbstractThis study examines investors' hedging behaviours in the credit default swap (CDS) market in response to the managerial tone of the Management Discussion and Analysis section in 10‐K/Q flings. Utilising CDS positions data derived from the Depository Trust & Clearing Corporation, we first document that managerial tone is negatively associated with CDS positions. We further find that such an effect is stronger for investors with less reliable alternative information channels and for firms with greater default probability. Our inferences persist when using the abnormal tone from a two‐stage analysis, when using change model regression, and when filtering out other potential confounding impacts. The results of this study advance the understanding of how the linguistic tone presented by management affects CDS market investors' hedging decision making through the use of public accounting information in financial disclosures.

Reported corporate misconducts: The impact on the financial markets.

This study empirically examines how reported corporate misconducts affect the stock returns of US firms. As the reported misconducts are broadcasted in the newspaper outlets, the cumulative abnormal return (CAR) is -4.1%. Involvement in a reported corporate misconduct gets punished by market participants especially when the act of reported misconduct is blamed on the level of the corporation rather than in involvement of a specific individual, when reported misconducts take place in the home market, and when the linguistic tone used in the newspaper article is negative. Financial penalties imposed, firm size, leverage, revenue growth, and the level of firm foreign exposure are found to have significant impact on the returns during the period of observation. The results suggest that investors recognize the importance to penalize firms in the financial markets when firms act unethically.

More than words: Can tone of consumer product reviews help predict firms’ fundamentals?

AbstractAlthough financial market participants are increasingly interested in the financial value of unstructured qualitative information regarding the prospects of a firm, empirical evidence remains sparse on the properties of qualitative content in consumer product reviews and their capital market implications. Using a broad sample of consumer reviews posted on Amazon.com, I examine whether the linguistic tone of aggregate consumer product reviews conveys information that is associated with firms’ sales, earnings, stock returns and risk. I find that aggregate review tone successfully predicts a firm's forthcoming quarterly sales. Moderating analyses show that this predictability is stronger for firms operating in a highly competitive environment. I further find that review tone predicts a firm's quarterly earnings surprises, abnormal stock returns and risk. A path analysis shows that the effect of review tone on stock prices is partially channeled through its effect on firms’ earnings. I finally find that negative review tone is more informative and useful than positive tone in predicting a firm's fundamentals. Importantly, these results hold after controlling for other review characteristics, including review rating, review volumeand review dispersion. Overall, my findings highlight the importance of considering the tone of consumer reviews when evaluating a firm's prospects and value.

When Music Speaks: An Acoustic Study of the Speech Surrogacy of the Nigerian Dùndún Talking Drum

Yorùbá dùndún drumming is an oral tradition which allows for manipulation of gliding pitch contours in ways that correspond to the differentiation of the Yorùbá linguistic tone levels. This feature enables the drum to be employed as both a musical instrument and a speech surrogate. In this study, we examined four modes of the dùndún talking drum, compared them to vocal singing and talking in the Yorùbá language, and analyzed the extent of microstructural overlap between these categories, making this study one of the first to examine the vocal surrogacy of the drum in song. We compared the fundamental frequency, timing pattern, and intensity contour of syllables from the same sample phrase recorded in the various communicative forms and we correlated each vocalization style with each of the corresponding drumming modes. We analyzed 30 spoken and sung verbal utterances and their corresponding drum and song excerpts collected from three native Yorùbá speakers and three professional dùndún drummers in Nigeria. The findings confirm that the dùndún can very accurately mimic microstructural acoustic temporal, fundamental frequency, and intensity characteristics of Yorùbá vocalization when doing so directly, and that this acoustic match systematically decreases for the drumming modes in which more musical context is specified. Our findings acoustically verify the distinction between four drumming mode categories and confirm their acoustical match to corresponding verbal modes. Understanding how musical and speech aspects interconnect in the dùndún talking drum clarifies acoustical properties that overlap between vocal utterances (speech and song) and corresponding imitations on the drum and verifies the potential functionality of speech surrogacy communications systems.

Levels versus changes: Information contents of textual information

AbstractWe clarify the information value of changes in the textual information of analyst reports. The analyses reveal that stock prices react considerably to changes in the linguistic tone of reports. In addition, prices react asymmetrically to the levels and changes of report tone, overreact to the levels, and underreact to changes. Our evidence suggests that a change in the textual tone provides incremental information that investors overlook, supporting the informational value of changes in textual information.

Linguistic Tone and Non-Linguistic Pitch Imitation in Children with Autism Spectrum Disorders: A Cross-Linguistic Investigation.

The conclusions on prosodic pitch features in autism spectrum disorders (ASD) have primarily been derived from studies in non-tonal language speakers. This cross-linguistic study evaluated the performance of imitating Cantonese lexical tones and their non-linguistic (nonspeech) counterparts by Cantonese- and Mandarin-speaking children with and without ASD. Acoustic analyses showed that, compared with typically developing peers, children with ASD exhibited increased pitch variations when imitating lexical tones, while performed similarly when imitating the nonspeech counterparts. Furthermore, Mandarin-speaking children with ASD failed to exploit the phonological knowledge of segments to improve the imitation accuracy of non-native lexical tones. These findings help clarify the speech-specific pitch processing atypicality and phonological processing deficit in tone-language-speaking children with ASD.

Annual report narrative disclosures, information asymmetry and future firm performance: evidence from Vietnam

PurposeThis paper examines the role of the annual report’s linguistic tone in predicting future firm performance in an emerging market, Vietnam.Design/methodology/approachBoth manual coding approach and the naïve Bayesian algorithm are employed to determine the annual report tone, which is then used to investigate its impact on future firm performance.FindingsThe study finds that tone can predict firm performance one year ahead. The predictability of tone is strengthened for firms that have a high degree of information asymmetry. Besides, the government’s regulatory reforms on corporate disclosures enhance the predictive ability of tone.Research limitations/implicationsThe study suggests the naïve Bayesian algorithm as a cost-efficient alternative for human coding in textual analysis. Also, information asymmetry and regulation changes should be modeled in future research on narrative disclosures.Practical implicationsThe study sends messages to both investors and policymakers in emerging markets. Investors should pay more attention to the tone of annual reports for improving the accuracy of future firm performance prediction. Policymakers should regularly revise and update regulations on qualitative disclosure to reduce information asymmetry.Originality/valueThis study enhances understanding of the annual report’s role in a non-Western country that has been under-investigated. The research also provides original evidence of the link between annual report tone and future firm performance under different information asymmetry degrees. Furthermore, this study justifies the effectiveness of the governments’ regulatory reforms on corporate disclosure in developing countries. Finally, by applying both the human coding and machine learning approach, this research contributes to the literature on textual analysis methodology.

Presidential candidates linguistic tone: The impact on the financial markets

We investigate U.S. presidential candidates’ unprecedented use of Twitter to compliment on specific firms during election campaigns. We examine the linguistic tone used in presidential candidates’ tweets and we find that it significantly affects stock market reaction. Trump’s tweets bearing positive linguistic tone about specific firms shows daily CAR of 0.20%, whereas the positive tone from all Republican yields a CAR of 0.24%. Linguistic tone effects are particularly significant when media firms are excluded from the sample. Our results suggest that investors recognize the importance for firm value of information transmitted on social media by an influential source.

Director Going Concern Note Disclosure and Distress Resolution

This study considers the informativeness of directors’ disclosure of going concern uncertainty in the financial statement notes that are regulated by AASB 101. It examines whether first-time disclosures and the linguistic tone of their content are related to distress resolution for companies that enter Voluntary Administration (VA), which is the insolvency rescue scheme in Australia. The results show that disclosures with a negative tone and those with a preponderant negative tone are related to VA outcomes. Overall, the findings show directors use AASB 101 note disclosures to provide useful information about going concern uncertainty.

Language barriers in analyst reports

This study explores whether language barriers affect investors’ reactions to textual information in analyst reports. To this end, we compare the price reaction to the linguistic tone in Japanese and U.S. reports and analyze the effect of an English translation on that reaction. We find that prices react significantly to the linguistic tone in both Japanese and U.S. reports. However, we only observe a statistically significant price underreaction to Japanese reports. Further, the existence of an English translation mitigates this price underreaction. These findings support the view that language barriers induce investors to underreact to textual information.

Linguistic tone of management discussion and analysis disclosures and the municipal debt market

PurposeAs the management discussion and analysis (MD&A) section contains discretionary narrative disclosures regarding a government's yearly financial changes and status, the authors investigate several municipal debt market consequences of linguistic tone within these disclosures.Design/methodology/approachThe authors textually analyze municipal MD&As with Linguistic Inquiry and Word Count (LIWC) software and develop narrative tone measures based on existing financial-specific dictionaries. Using a final sample of 446 municipal bond issuances from 2012 to 2016, the authors modify the current bond regression models to examine the association between MD&A disclosure tone and future bond interest costs or rating disagreements.FindingsThis study’s empirical analysis suggests that more negative MD&A tone is associated with higher future debt costs and greater future disagreements among bond rating agencies.Practical implicationsOverall, the evidence implies that municipal bond stakeholders use the information in narrative disclosures when evaluating risk, but that the qualitative nature can introduce differences in interpretation between users. Furthermore, additional training in MD&A writing and further standard guidance in MD&A disclosures could improve the MD&A's informativeness for bond market decision-making and state-level monitoring.Originality/valueThis study is first to incorporate narrative tone measures into bond models in a governmental context.

Is information in deferred tax valuation allowance useful in predicting the firm’s ability to continue as a going concern incremental to MD&A disclosures and auditor’s going concern opinions?

This study explores the role of deferred tax valuation allowances, management’s discussion of ability to continue as a going concern, and auditor going concern opinions in predicting the financial distress of a firm. Mayew et al. (Account Rev 90(4):1621–1651, 2015) show that textual disclosures in the Management, Discussion, and Analysis (MD&A) section of a firm’s SEC 10-K filing predict a firm’s ability to continue as a going concern. This study advances their analysis by including deferred tax valuation allowances in their framework. To the extent valuation allowances incorporate managers’ private information about future profitability, valuation allowances are useful in identifying the transitory nature of losses and thus the going concern status of the firm. Using a sample of firms that filed for bankruptcy over the period 2002–2018, the study shows that increases to valuation allowances are incrementally informative in predicting a firm’s ability to continue as a going concern after considering management’s textual disclosures, linguistic tone of the MD&A, auditor’s going concern opinions, financial statement ratios, and market-based variables. These results extend to three years prior to bankruptcy. The results also speak to the evolving roles of MD&A disclosures and auditor opinions on going concern.

Analyst Confirmation of Management Forecast Credibility During a Global Crisis

This paper examines whether textual management forecast commonalities that arise in a global crisis setting relate to ex post forecast accuracy, and whether subsequent analyst revisions confirm the credibility relevance of these commonalities. This approach is motivated by two conclusions. First, extant studies focus on general commonalities such as external (vs. internal) attributions, instead of specific subsets of these regularities that have the capacity to affect many management forecasts at the same time. Second, studies seldom focus on global crisis periods, although they acknowledge that those periods serve as catalysts for creating measures to assess management forecast credibility. After arguing that sales forecasts are most directly affected by global crisis conditions, I predict and find that management who attribute their sales forecasts (in full or in part) to the global crisis issue forecasts that are more accurate ex post. This finding is not consistent with the common assumption that external attributions are not based on skill and effort, and consistent with theoretical models of signaling and management ability. Furthermore, the ‘crisis’ attribution gives rise to a dictionary-free alternative to the linguistic tone measure which is related to ex post forecast accuracy. Analyst confirmation of the credibility relevance of these two measures suggests that they are useful for future research. Policy makers and regulators should find these results interesting as they offer new ways to improve the comparability of management forecasts.

Does Wall Street Understand Fed Speak? Monetary Policy Communication and Corporate Conference Calls

We uncover a tone transmission channel of monetary policy wherein the linguistic tone of press releases by the shapes the linguistic tone of macro-related dialogues in corporate conference calls occurring days after such releases. Applying machine-learning techniques to a granular dataset of dialogues between managers and equity analysts during conference calls, we find that the tone of macro-related dialogues is reflected in both contemporaneous stock market reactions as well as subsequent equity analysts' stock recommendations. Critically, the semantic content of monetary policy releases is consistently observed in macro dialogues between managers and analysts. A large sample analysis suggests that the effect of monetary policy tone on corporate conference calls is stronger in more recent years and for major unconventional monetary policy announcements. Taken together, our results shed light on how economic agents interpret Fed Speak,'' underscoring non-transitory effects of monetary policy communication.