Framing in earnings press releases: effects on related stock price reactions

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.advisor Eräranta, Kirsi
dc.contributor.advisor Ikäheimo, Seppo Kreus, Outi 2017-05-30T05:45:09Z 2017-05-30T05:45:09Z 2017
dc.description.abstract The objective of this study is to find out whether the framing in earnings press releases has effect on the related market reaction. More precisely, I look into the narrative content of earnings press releases, how that content is constructed and whether this is connected to how investors will respond to it. A central assumption in earlier research has been that companies make additional disclosures in the narrative sections and investors react especially to this new information. This study provides an alternative approach by suggesting that investors might also be influenced by how this information is framed. The theoretical perspective is provided by framing theory, which suggests that depending on how information is presented the interpretation of that information alters. Although framing theory doesn’t take stand to the intentionality of message construction, it provides the theoretical background for understanding why it makes a difference how information is expressed. Earlier studies approaching corporate financial disclosing from the perspective of framing theory have been conducted in managed settings, but I extend from there by studying whether investors are influenced by framing on market level. To empirically test for this, I use a combination of short-window event study and content analysis. The earnings press release data sample consists of 3103 releases between years 2010–2016 that belong to companies trading in the Nasdaq OMX Nordic Large Cap –index in December 2016. The narrative content in earnings press releases is converted into quantitative data by employing several content analysis methods. The impacts of a positive frame are analyzed both on the level of the entire release as well as in specific sections of it, the main heading, the management statement and the outlook section. In addition to the positive language, the impacts of length and verbal complexity are analyzed. Finally, also the impacts of passive voice constructions are looked into. The findings of the study suggest that investors are influenced by how earnings press releases are framed. The results suggest that overall positive frames in earnings press releases are related to more positive stock price reactions, and within the releases especially the management statement and financial outlook sections are related to positive stock price movements. No association is found between the market reaction and the positive frame in the main heading solely. Furthermore, the findings indicate that length as such doesn’t relate to the market reaction, but increased length has indirect significance since it decreases the positive stock price reaction triggered by unexpected earnings. No association between text complexity and the related market reaction is found. Finally, the increase in use of passive constructions relates to a less positive market reaction. en
dc.format.extent 74
dc.language.iso en en
dc.title Framing in earnings press releases: effects on related stock price reactions en
dc.type G2 Pro gradu, diplomityö fi Kauppakorkeakoulu fi School of Business en
dc.contributor.department Johtamisen laitos fi
dc.subject.keyword corporate communication en
dc.subject.keyword corporate financial disclosing en
dc.subject.keyword earnings announcement en
dc.subject.keyword earnings press release en
dc.subject.keyword framing en
dc.subject.keyword stock price reaction en
dc.identifier.urn URN:NBN:fi:aalto-201705304974
dc.type.ontasot Master's thesis en
dc.type.ontasot Maisterin opinnäyte fi
dc.programme Corporate Communication en
dc.subject.helecon yritysviestintä fi
dc.subject.helecon viestintä fi
dc.subject.helecon laskentatoimi fi
dc.subject.helecon tilinpäätös fi
dc.subject.helecon raportit fi
dc.subject.helecon tiedotustoiminta fi
dc.subject.helecon osakemarkkinat fi
dc.subject.helecon reaktio fi
dc.ethesisid 14964
dc.location P1 I fi

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