Bankruptcy in the UK: Do Managers Talk the Talk Before Walking the Walk?

Author:

Ahmed Yousry12ORCID,Elsayed Mohamed34ORCID,Xu Bin5ORCID

Affiliation:

1. Accounting and Finance Department Newcastle University Newcastle upon Tyne NE4 5TG UK

2. Business Administration Department Zagazig University Zagazig 44511 Egypt

3. Queen's Business School Queen's University Belfast Belfast BT9 5EE UK

4. Accounting Department Mansoura University Mansoura 35516 Egypt

5. Leeds University Business School University of Leeds Leeds LS2 9JT UK

Abstract

AbstractThis study examines whether managers employ annual report textual disclosures as a conduit to communicate the probability of future corporate bankruptcy or to intentionally mislead stakeholders owing to impression management incentives. We conduct various examinations around the information content of the tone conveyed by textual disclosures in unstructured UK annual reports and the probability of corporate bankruptcy. We document that firms that communicate a more net positive tone are associated with lower bankruptcy risk. Importantly, this association is found to be stronger for firms whose managers have a lower incentive to mislead investors owing to better board monitoring, stringent stock market regulation, and Big 4 audits. We also offer complementary evidence that firms conveying a more net positive tone exhibit higher future performance and earnings persistence, and lower future performance volatility. These firms are also less likely to exhibit extreme corporate policies and to receive a qualified auditor's opinion. Overall, this study sheds light on whether managers tend to inform or misinform (bury their heads in the sand) about corporate bankruptcy.

Publisher

Wiley

Reference81 articles.

1. Comparing the performance of market-based and accounting-based bankruptcy prediction models

2. Accounting conservatism and board of director characteristics: An empirical analysis

3. The effect of bidder conservatism on M&A decisions: Text-based evidence from US 10-K filings

4. Alberti S.(2022).‘Directors ‘leaving it far too late’ as UK insolvencies surge’. 01 January 2023. Retrieved from:https://www.accountancyage.com/2022/12/15/directors‐leaving‐it‐far‐too‐late‐as‐uk‐insolvencies‐surge/

5. The Structure of Voluntary Disclosure Narratives: Evidence from Tone Dispersion

同舟云学术

1.学者识别学者识别

2.学术分析学术分析

3.人才评估人才评估

"同舟云学术"是以全球学者为主线,采集、加工和组织学术论文而形成的新型学术文献查询和分析系统,可以对全球学者进行文献检索和人才价值评估。用户可以通过关注某些学科领域的顶尖人物而持续追踪该领域的学科进展和研究前沿。经过近期的数据扩容,当前同舟云学术共收录了国内外主流学术期刊6万余种,收集的期刊论文及会议论文总量共计约1.5亿篇,并以每天添加12000余篇中外论文的速度递增。我们也可以为用户提供个性化、定制化的学者数据。欢迎来电咨询!咨询电话:010-8811{复制后删除}0370

www.globalauthorid.com

TOP

Copyright © 2019-2024 北京同舟云网络信息技术有限公司
京公网安备11010802033243号  京ICP备18003416号-3