The evolution of 10-K textual disclosure: Evidence from Latent Dirichlet Allocation

Dyer, Travis; Lang, Mark H.; Stice‐Lawrence, Lorien

doi:10.1016/j.jacceco.2017.07.002

Cited by 571 publications

(288 citation statements)

References 35 publications

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“…These results add a new perspective on boilerplate language by suggesting that such language reflects structural aspects of a bank that change slowly over time. It is also noteworthy that while the use of boilerplate language has increased significantly over time (Dyer et al, 2017), we find that boilerplate similarity across banks does not exhibit an increasing trend and the informative of such similarity for predicting future tail comovement has not deteriorate through time.…”

mentioning

confidence: 69%

“…We begin by separating our primary measure, AvgCos_BUSMDA, into boilerplate and non-boilerplate similarity following the methodology from Lang and Stice-Lawrence (2015) and Dyer et al, (2017). Specifically, a sentence is designated as boilerplate if it contains a 4-word phrase which appears in more than 60% of the BUS or MD&A disclosures of all banks in a given year.…”

Section: Relative Information Content Of Boilerplate and Non-boilerplmentioning

confidence: 99%

“…1 Further, our exploration the information properties of boilerplate language similarity across banks relative to non-boilerplate text similarity, contributes to the debate about the consequences of increasingly onerous accounting disclosures (Dyer et al, 2017;Li, 2008;SEC, 2013).…”

Section: Introductionmentioning

confidence: 96%

“…In this regard, we separate our primary measure (i.e., the combined business and MD&A text) into boilerplate language and non-boilerplate language following the methodology from Lang and Stice-Lawrence (2015) and Dyer et al, (2017). We then compute a separate boilerplate similarity measure and nonboilerplate similarity measure.…”

Section: Introductionmentioning

confidence: 99%

“…Significant increases in the length and complexity of 10-K verbal disclosures have prompted concerns about the usefulness and informativeness of these disclosures (KPMG, 2011;SEC, 2013;Lang and Stice-Lawrence (2015); Dyer et al (2017). Because the value of information depends on context, our extension to predicting tail comovement across banks expands the frontier of knowledge about the information content of 10-K disclosures.…”

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confidence: 99%

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Informativeness and Timeliness of 10-K Text Similarity for Predicting Tail-Risk Comovement

2017

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We measure a bank's connectedness by constructing a measure of its text similarity with other banks based on 10-K business description and MD&A discussions. We find that tail-risk comovement between a given bank and the banking system is increasing in the bank's average similarity. We also construct groups of connected peer banks, finding that banks co-move significantly more in the tails with their highest similarity peers. Finally, we separate 10-K text into boilerplate and non-boilerplate components. We find that both boilerplate and nonboilerplate similarity have incremental information about future tail comovement. However, nonboilerplate similarity is significantly timelier than boilerplate, consistent with non-boilerplate similarity capturing commonalities across banks in currently evolving fundamentals and boilerplate similarity capturing commonalities in structural features that evolve slowly over time.

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mentioning

confidence: 69%

Section: Relative Information Content Of Boilerplate and Non-boilerplmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 96%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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Informativeness and Timeliness of 10-K Text Similarity for Predicting Tail-Risk Comovement

2017

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Costs associated with exit or disposal activities: A topic modeling investigation of disclosure and market reaction

Cullinan,

Holowczak,

Louton

et al. 2023

Intell Sys Acc Fin Mgmt

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SummaryThe Securities and Exchange Commission (SEC) mandates disclosure of exit or disposal activity events in 8‐K filings. We use Latent Dirichlet Allocation (LDA), a topic modeling method from computational linguistics, to investigate the possibility that substantively different event types may be subsumed under Item 2.05, the SEC category for costs associated with exit or disposal activities. Our analysis reveals that four distinct topics are reported under the Item 2.05 umbrella category: (1) restructuring, (2) disposal of a line of business, (3) plant closings, and (4) layoffs/workforce reductions. We then investigate various aspects of these 8‐K filings. We find that the market reacts most negatively to workforce reductions that are reported in the absence of a broader strategic initiative. Subsequent amendments to the Item 2.05 8‐K filings are significantly more likely for restructuring initiatives, and significantly less likely for layoffs. Asset impairment charges most frequently accompany line‐of‐business disposals and plant closings. Our results demonstrate that there are meaningful differences between the event types reported within Item 2.05 filings and that LDA provides a useful means of differentiating among these event types.

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Audit committee voluntary disclosure describing external auditor oversight: Does it reflect higher audit quality?

O’Shaughnessy

Sahyoun

Tervo

2022

J Corp Accounting Finance

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This study examines the association between audit committee voluntary disclosures related to external auditor oversight and audit quality of the top US bank holding companies for a period of 10 years. Using manual coding of the voluntary disclosures that target audit committee oversight of the external auditor, we find that audit committees with a higher level of voluntary disclosures delineating activities of external auditor oversight tend to have a higher audit quality. These results are consistent with the view that audit committees play a major role in overseeing the external audit process as was emphasized by the Sarbanes-Oxley (SOX) Act. In the case of negligence or wrongdoing, audit committees can be sued for breaching due care; thus, voluntary disclosure is a reliable indicator of the audit committee effectiveness and oversight of the audit process. Using voluntary disclosures in the audit committee report, this research provides useful information to shareholders to evaluate the effectiveness of audit committees in monitoring the external audit process while answering previous calls to investigate the audit committee oversight process (and corresponding effect on audit quality) and not just focusing on audit committee characteristics such as size, expertise, experience, meeting frequency, and audit fees.

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The evolution of 10-K textual disclosure: Evidence from Latent Dirichlet Allocation

Cited by 571 publications

References 35 publications

Informativeness and Timeliness of 10-K Text Similarity for Predicting Tail-Risk Comovement

Informativeness and Timeliness of 10-K Text Similarity for Predicting Tail-Risk Comovement

Costs associated with exit or disposal activities: A topic modeling investigation of disclosure and market reaction

Audit committee voluntary disclosure describing external auditor oversight: Does it reflect higher audit quality?

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