Does Positive Text Expression Perceived Better: Evidence from China Government Subsidy Announcement

Abstract

Text expression in the announcement of listed companies is very important while its market effect is not fully discovered. Government subsidy is regarded as good news because it can increase earnings directly. However, the text expression may indicate opposite effect. There are generally two ways of text expression besides the number of subsidies, positive and neural. We document the market reaction and the economic consequence of each type, examine factors that have the cross-sectional effect and provide possible explanation for managers to take negative mood. Collectively, our findings shed light on the power and information content of text, as well as the behavior of managers.