Structural readability and informativeness of bullet points in EPRs: A topic modeling approach

Details

Supervisors

Thewissen, James

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

Information asymmetry in earning press releases (EPRs) have been studied for years, making the readability of these documents a decisive factor in apprehending the link between a company's communication and its investors' understanding. However, the impact of structural readability on investors is little investigated. In this thesis, we study the informativeness of bullet points in EPRs. Using a sample of EPRs from 1,725 companies from 2004 to 2021, we find that bullet points have an impact on investor reaction in the medium term (3 to 5 days before and after the announcement). Moreover, we show that this relationship was even more significant when the company was small. Using an LDA topic modeling method, we identify five topics present in the bullet points and show that the performance-related topic has the greatest impact on investor reaction. Finally, our results suggest that investors’ information processing follow a conceptual fluency when reading bullet points.