Readability and sentiment analysis of financial statements: Evidence from India

Chhatwani, Malvika (2021) Readability and sentiment analysis of financial statements: Evidence from India. SCMS Journal of Indian Management, 18 (3). pp. 87-94. ISSN 09733167

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Investors have started relying on advanced techniques such as textual analysis to understand the inherent complexities of annual reports. It is believed that annual reports present implicit information of the management that can be invaluable for investors and other stakeholders. Using the NIFTY 50 companies as our sample, we examine the annual reports for the year 2018-19 and analyze the scope and presence of sentiment and readability differentials across various sections of the annual reports covering the Chairman's Speech, the Director's Report, Management Discussion & Analysis (MD&A) and Notes to Accounts. Even though these sections are given in the same annual report, their readability and sentiment scores vary across different sections. Chairman's speech is the most readable and has the highest positive sentiment score. In contrast, Director's Report, MD&A, and Notes to Account have increasing difficulty in readability scores and relatively lower sentiment scores. The implications for practitioners and investors are discussed.

Item Type: Article
Keywords: Annual reports | NIFTY 50 | Readability score | Sentiment analysis
Subjects: Social Sciences and humanities > Economics, Econometrics and Finance > Banking and Finance
JGU School/Centre: Jindal School of Banking & Finance
Depositing User: Mr. Syed Anas
Date Deposited: 25 Jan 2022 11:57
Last Modified: 25 Jan 2022 11:57
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