Investigation of the Relationship between Financial Reporting Tone with Future Corporate Performance and Market Return

In recent years, various aspects of the quality information of financial reports have attracted the attention of legislators, supervisory institutions and professional institutions active in the capital market. The purpose of this study was to investigate the relationship between the financial reporting tone as an important aspect of the qualitative information of financial reports, with the prediction of firm performance and market returns around the days of information dissemination. Theoretically, the tone used in financial reports can reflect managers' expectations of future corporate performance. In addition, information users can respond to these expectations by making a decision based on it. For this experimental study, the present study uses textual analysis methodology and information of 140 listed companies at Tehran Stock Exchange between 1390 and 1395. The research results indicate that managers, using the tone of financial reports, transfer their expectations of future corporate performance to potential and actual investors. However, the market does not give a meaningful answer to the tone used in the financial report on the day the information is released.