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.

Tone Systems

This chapter presents tonal systems in all their variety, including relatively familiar and unfamiliar facets of tone. Among the parameters that can differ among languages with contrastive pitch levels are the number of phonological levels, the domain of tone features, the presence or absence of accentual properties, whether contour tones behave as single units or sequences of levels, and the presence of downstep and other register phenomena. Tone can undergo vertical or horizontal assimilation as well as dissimilation. Tone can function lexically, morphologically, syntactically, or semantically. No other phonological features exhibit the long-distance effects found with tone. Examples chosen from languages from around the world illustrate the variety of behaviours associated with linguistic tone and, to some extent, the types of analysis that have attempted to account for them.

Managerial optimism and corporate cash holdings

PurposeThis paper examines the effects of managerial optimism on corporate cash holdings.Design/methodology/approachThe authors construct a novel measure of managerial optimism based on the linguistic tone of annual reports by applying a Naïve Bayesian Machine Learning algorithm to non-numeric parts of Vietnamese listed firms' reports from 2010 to 2016. The paper employs firm and year fixed effects model and also uses the generalized method of moments estimation as robustness checks.FindingsThe authors find that the cash holding of firms managed by optimistic managers is higher than the cash holdings of firms managed by non-optimistic managers. Managerial optimism also influences corporate cash holdings through internal cash flows and the current year’s capital expenditures. Although the authors find no evidence that optimistic managers hold more cash to finance future growth opportunities in general, optimistic managers hold more cash for near future investment opportunities than non-optimistic managers do.Research limitations/implicationsThe novel measure proposed in this study is expected to provide great potential for future finance studies investigating the relation between managerial traits and corporate policies since it is applicable for any levels of financial market development. In addition, the findings highlight the important role, both direct and indirect, of managerial optimism on cash holdings. Related future research should take this psychological trait into account to gain a better understanding of corporate cash holding.Originality/valueThis paper helps to extend the literature on managerial optimism measurement by introducing a new measure of managerial optimism based on the linguistic tone of annual reports. Furthermore, this is among the first studies directly linking annual report linguistic tone to cash holding. The paper also provides new evidence regarding how managerial optimism affects the relationship between the firm's growth opportunities and cash holding, given that mispricing corrections are naturally uncertain.

The complexity of tone in Nubri

This paper introduces the tonal system of the amagaun dialect of Nubri. We first present an introduction to linguistic tone, with a focus on tone as it is found in Tibetan languages, before moving on to describe the tones in Samagaun Nubri monosyllables and disyllabic expressions. We conclude that the tonal system in Nubri cannot be accounted for by exclusive reference to Tibetan languages. The implication is that contact with a non-Tibetan language has played a significant role in the history of the language.