Research On The Influence Of The Tone Of The Annual Report Of Listed Companies On Investors’ Attention

With the development of information technology,investors in the capital market have gradually shifted from following the trend blindly to the rational investment,which stems from the accumulation of professional knowledge and the acquisition of external information.Because some useful information can be obtained quickly,investors can react quickly,and then participate in the process of investing in some important firms.This process fully reflects the important role of investor attention in the whole market operation process.For investors,the decisions of listed firms or some unexpected events may attract the attention of investors.The release of annual reports by listed firms enables market investors to understand their operating conditions and development goals,and help these investors know the development potential of these firms.Although most investors have been able to understand the operating information in annual reports,investors cannot identify whether the listed firms have manipulated the tone of annual report,and some annual reports with expressing optimism may incorrectly guide investors to make investment decisions.Since listed firms prefer to disclose more positive information,this can be explained by the theory of impression management.In this process,the annual report tone of listed firms can reflect the impression management process,and also influence the attitude of investors towards listed firms.To explore the consequence of annual report tone,this paper uses the textual analysis method to expand the existing dictionary of tone,and then measures the degree of annual report tone in each year.Using the data of Chinese A-share listed firms from 2011 to 2021,this paper constructs a panel data model to analyze the impact of annual report on investor attention,and finds that when the tone of annual report is more positive,the degree of investor attention will decrease.In addition,there is a significant inverted U-shaped relationship between annual report tone and investor attention,which also explains why the increase of positive tone will inhibit the degree of investor attention.In order to further verify these results,this paper implement the heterogeneity tests from four dimensions,including the degree of optimism,policy implementation,financial constraints and managers’ characteristics.The over-optimistic expression of managers will make investors to reduce their attention to listed firms,and the implementation of information disclosure related policies can help investors better understand the content of annual report,which can make investors reduce their attention to listed firms with expressing more positive words.Listed firms facing higher financial constraints are more likely to use positive tone to gain the trust of investors,but this process may also cause investors to have negative feelings towards listed firms.Compared with young managers,senior managers pay more attention to impression management,but this will also reduce investors’ attention to their listed firms.The research findings of this paper can help investors better understand the real purpose of managers of listed firms,and also effectively promote the healthy development of the entire stock market,which is of great significance for maintaining social stability and promoting economic growth.