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Financial Innovation

Table 8 Information technology industry versus non-information technology industry

From: Tone of language, financial disclosure, and earnings management: a textual analysis of form 20-F

 

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Panel A (Information technology industry)

Positive

9.877***

       
 

(3.09)

       

Negative

 

1.379

      
  

(1.13)

      

Uncertainty

  

4.664***

     
   

(2.83)

     

Litigious

   

1.292*

    
    

(1.72)

    

Strongml

    

11.25**

   
     

(2.07)

   

Moderml

     

17.52**

  
      

(3.39)

  

Weakml

      

5.511**

 
       

(2.14)

 

Irrverb

       

4.381

        

(1.33)

Controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Firm

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Industry

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Year

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

N

193

193

193

193

193

193

193

193

Adj. R2

0.126

0.020

0.003

0.013

0.009

0.006

0.008

0.017

Panel B (Non-information technology industry)

Positive

4.459**

       
 

(2.25)

       

Negative

 

0.189

      
  

(0.19)

      

Uncertainty

  

2.414**

     
   

(2.01)

     

Litigious

   

− 0.686

    
    

(− 1.12)

    

Strongml

    

3.466

   
     

(1.07)

   

Moderml

     

2.919

  
      

(0.62)

  

Weakml

      

4.162**

 
       

(2.12)

 

Irrverb

       

1.540

        

(0.63)

Control

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Firm

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Industry

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Year

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

N

256

256

256

256

256

256

256

256

Adj. R2

0.241

0.224

0.238

0.228

0.228

0.225

0.239

0.225

  1. This table reports the regression results for both the information technology industry and non-information technology industry. The sample is obtained from the S&P Capital IQ and supplemented from the Wind Database. Positive, negative, uncertain, litigious, strong modal, moderate modal, weak modal, and irregular verbs are the eight categories of wordlist defined from the 2014 Master Dictionary of McDonald and Loughran and McDonald (2011) word list. For the sake of brevity, we use Controls to represent all the control variables. The dependent variable is the estimates of discretionary revenues, proposed by McNichols and Stubben (2008) and Stubben (2010), as a proxy of earnings management. There are 193 observations for information technology industry and 256 for non-information technology industry. For the sake of brevity, we use Controls as all the controlled variables. All regressions include firm, industry, and year fixed effects. The t-statistics are in parentheses
  2. ***, **, and * denote significance at the 1%, 5%, and 10% level, respectively
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