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Oliveira, M. G., Azevedo, G. & Oliveira, J. (2021). The relationship between the company’s value and the tone of the risk-related narratives: The case of Portugal. Economies. 9 (2)

M. G. Oliveira et al.,  "The relationship between the company’s value and the tone of the risk-related narratives: The case of Portugal", in Economies, vol. 9, no. 2, 2021

@article{oliveira2021_1714598451990,
	author = "Oliveira, M. G. and Azevedo, G. and Oliveira, J.",
	title = "The relationship between the company’s value and the tone of the risk-related narratives: The case of Portugal",
	journal = "Economies",
	year = "2021",
	volume = "9",
	number = "2",
	doi = "10.3390/economies9020070",
	url = "https://www.mdpi.com/journal/economies"
}

TY  - JOUR
TI  - The relationship between the company’s value and the tone of the risk-related narratives: The case of Portugal
T2  - Economies
VL  - 9
IS  - 2
AU  - Oliveira, M. G.
AU  - Azevedo, G.
AU  - Oliveira, J.
PY  - 2021
SN  - 2227-7099
DO  - 10.3390/economies9020070
UR  - https://www.mdpi.com/journal/economies
AB  - The present study aims to identify the impact of the tone of risk reporting narratives on
company market value. The paper uses a sample of 34 Portuguese non-finance companies with shares
traded at the Euronext Lisbon stock exchange market. The paper conducts an automated content
analysis of the risk reporting narratives included in the risk and risk management sections of the
annual reports for 2018 by using the software DICTION 7 (Digitext, Inc., Austin, TX, USA) to retrieve
the speech tone. Main findings indicate that the tone category “activity” is associated negatively
with the company’s market value. This result shows that investors misprice risk information that
incorporates traces of overconfidence, narcissistic self-confidence and heroic leadership. The present
study extends prior literature by analyzing the economic incentives of the tone of risk reporting
narratives, not yet studied. Findings are both relevant to investors to support their decision-making
processes and managers to strategically manage their risk communication tactics and benefit from
the advantages emanated from them. Limitations related to the research setting do not undermine
the generalization of findings because the automated algorithm provided by DICTION assures the
content analysis’s reliability. The sample used corresponds to the population of the Portuguese
non-finance listed companies.
ER  -