Stock returns and future tense language in 10-K reports

Research output: Contribution to journalArticlepeer-review


This paper shows that firms talking less about the future in their annual reports generate positive abnormal returns of about 5% annually. I measure how much companies talk about the future in their annual 10-K reports by the frequency of the verbs will, shall, and going to. The evidence favors a risk-based interpretation: firms that use less future tense in their report offer higher returns since they are riskier. These results are consistent with finance theories stating that investors need to be rewarded for holding stocks of firms that put less information about the future in the marketplace.

Original languageEnglish (US)
Pages (from-to)50-61
Number of pages12
JournalJournal of Banking and Finance
StatePublished - Oct 1 2016


  • Anomalies
  • Asset pricing
  • Information risk
  • Text analysis

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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