Can We Trust the Trust Words in 10-Ks?
We examine the relation between earnings information content and the use of trust words, such as “ character ,” “ ethics ,” and “ honest, ” in the MD&A section of 10-K. We find that earnings announcements of firms using trust words have lower information content than earnings announcements of fi...
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| Veröffentlicht in: | Journal of business ethics 2024-04, Vol.190 (4), p.975-992 |
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| container_title | Journal of business ethics |
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| creator | Cho, Myojung Krishnan, Gopal V. Cho, Hyunkwon |
| description | We examine the relation between earnings information content and the use of trust words, such as “
character
,” “
ethics
,” and “
honest,
” in the MD&A section of 10-K. We find that earnings announcements of firms using trust words have lower information content than earnings announcements of firms that do not use trust words. We also find that the value relevance of earnings is lower for firms using trust words than those not using trust words. Further, firms using trust words are more likely to receive a comment letter from the SEC, pay higher audit fees, and have lower corporate social responsibility scores. Overall, our results suggest that firms that use trust words in the 10-K are associated with negative outcomes, and trust words are an inverse measure of trust. |
| doi_str_mv | 10.1007/s10551-023-05350-y |
| format | Article |
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character
,” “
ethics
,” and “
honest,
” in the MD&A section of 10-K. We find that earnings announcements of firms using trust words have lower information content than earnings announcements of firms that do not use trust words. We also find that the value relevance of earnings is lower for firms using trust words than those not using trust words. Further, firms using trust words are more likely to receive a comment letter from the SEC, pay higher audit fees, and have lower corporate social responsibility scores. Overall, our results suggest that firms that use trust words in the 10-K are associated with negative outcomes, and trust words are an inverse measure of trust.</description><identifier>ISSN: 0167-4544</identifier><identifier>EISSN: 1573-0697</identifier><identifier>DOI: 10.1007/s10551-023-05350-y</identifier><language>eng</language><publisher>Dordrecht: Springer Netherlands</publisher><subject>Accounting ; Announcements ; Annual reports ; Audit fees ; Audit risk ; Business and Management ; Business Ethics ; Companies ; Corporate culture ; Earnings ; Education ; Ethics ; Hypotheses ; Information content ; Investments ; Management ; Original Paper ; Philosophy ; Quality of Life Research ; Social responsibility ; Text analysis ; Words</subject><ispartof>Journal of business ethics, 2024-04, Vol.190 (4), p.975-992</ispartof><rights>The Author(s), under exclusive licence to Springer Nature B.V. 2023. Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c409t-d9b24adf2c3b63f53f7cca3167b05d513af94bbc10f85b8ce416e1053524e7cd3</citedby><cites>FETCH-LOGICAL-c409t-d9b24adf2c3b63f53f7cca3167b05d513af94bbc10f85b8ce416e1053524e7cd3</cites><orcidid>0000-0002-0567-9345</orcidid></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://link.springer.com/content/pdf/10.1007/s10551-023-05350-y$$EPDF$$P50$$Gspringer$$H</linktopdf><linktohtml>$$Uhttps://link.springer.com/10.1007/s10551-023-05350-y$$EHTML$$P50$$Gspringer$$H</linktohtml><link.rule.ids>314,776,780,27843,27901,27902,41464,42533,51294</link.rule.ids></links><search><creatorcontrib>Cho, Myojung</creatorcontrib><creatorcontrib>Krishnan, Gopal V.</creatorcontrib><creatorcontrib>Cho, Hyunkwon</creatorcontrib><title>Can We Trust the Trust Words in 10-Ks?</title><title>Journal of business ethics</title><addtitle>J Bus Ethics</addtitle><description>We examine the relation between earnings information content and the use of trust words, such as “
character
,” “
ethics
,” and “
honest,
” in the MD&A section of 10-K. We find that earnings announcements of firms using trust words have lower information content than earnings announcements of firms that do not use trust words. We also find that the value relevance of earnings is lower for firms using trust words than those not using trust words. Further, firms using trust words are more likely to receive a comment letter from the SEC, pay higher audit fees, and have lower corporate social responsibility scores. Overall, our results suggest that firms that use trust words in the 10-K are associated with negative outcomes, and trust words are an inverse measure of trust.</description><subject>Accounting</subject><subject>Announcements</subject><subject>Annual reports</subject><subject>Audit fees</subject><subject>Audit risk</subject><subject>Business and Management</subject><subject>Business Ethics</subject><subject>Companies</subject><subject>Corporate culture</subject><subject>Earnings</subject><subject>Education</subject><subject>Ethics</subject><subject>Hypotheses</subject><subject>Information content</subject><subject>Investments</subject><subject>Management</subject><subject>Original Paper</subject><subject>Philosophy</subject><subject>Quality of Life Research</subject><subject>Social responsibility</subject><subject>Text 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We Trust the Trust Words in 10-Ks?</title><author>Cho, Myojung ; Krishnan, Gopal V. ; Cho, Hyunkwon</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c409t-d9b24adf2c3b63f53f7cca3167b05d513af94bbc10f85b8ce416e1053524e7cd3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2024</creationdate><topic>Accounting</topic><topic>Announcements</topic><topic>Annual reports</topic><topic>Audit fees</topic><topic>Audit risk</topic><topic>Business and Management</topic><topic>Business Ethics</topic><topic>Companies</topic><topic>Corporate culture</topic><topic>Earnings</topic><topic>Education</topic><topic>Ethics</topic><topic>Hypotheses</topic><topic>Information content</topic><topic>Investments</topic><topic>Management</topic><topic>Original Paper</topic><topic>Philosophy</topic><topic>Quality of Life Research</topic><topic>Social responsibility</topic><topic>Text analysis</topic><topic>Words</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Cho, Myojung</creatorcontrib><creatorcontrib>Krishnan, Gopal V.</creatorcontrib><creatorcontrib>Cho, Hyunkwon</creatorcontrib><collection>ECONIS</collection><collection>CrossRef</collection><collection>ProQuest Social Sciences Premium Collection</collection><collection>ProQuest Central (Corporate)</collection><collection>PAIS Index</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Healthcare Administration Database (Alumni)</collection><collection>Psychology Database (Alumni)</collection><collection>Social Science Database (Alumni Edition)</collection><collection>ProQuest Pharma Collection</collection><collection>International Bibliography of the Social Sciences 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Words in 10-Ks?</atitle><jtitle>Journal of business ethics</jtitle><stitle>J Bus Ethics</stitle><date>2024-04-01</date><risdate>2024</risdate><volume>190</volume><issue>4</issue><spage>975</spage><epage>992</epage><pages>975-992</pages><issn>0167-4544</issn><eissn>1573-0697</eissn><abstract>We examine the relation between earnings information content and the use of trust words, such as “
character
,” “
ethics
,” and “
honest,
” in the MD&A section of 10-K. We find that earnings announcements of firms using trust words have lower information content than earnings announcements of firms that do not use trust words. We also find that the value relevance of earnings is lower for firms using trust words than those not using trust words. Further, firms using trust words are more likely to receive a comment letter from the SEC, pay higher audit fees, and have lower corporate social responsibility scores. Overall, our results suggest that firms that use trust words in the 10-K are associated with negative outcomes, and trust words are an inverse measure of trust.</abstract><cop>Dordrecht</cop><pub>Springer Netherlands</pub><doi>10.1007/s10551-023-05350-y</doi><tpages>18</tpages><orcidid>https://orcid.org/0000-0002-0567-9345</orcidid></addata></record> |
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| subjects | Accounting Announcements Annual reports Audit fees Audit risk Business and Management Business Ethics Companies Corporate culture Earnings Education Ethics Hypotheses Information content Investments Management Original Paper Philosophy Quality of Life Research Social responsibility Text analysis Words |
| title | Can We Trust the Trust Words in 10-Ks? |
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