Copyfrom：Dept. of Accounting Time：2019-12-16
Theme：When Mutual Fund Managers Write Confidently
Speaker：Yawen Jiao（University of California, Riverside）
Address：Room 1008, Mingde Business Building
This paper studies the information content of a subtle writing style, the expression of confidence. We use unsupervised machine learning to generate a new lexicon for a writer’s level of certainty in expressing opinions. Using it to capture mutual fund managers’ confidence in letters to shareholders, we show confidence contains important information about skill: underperforming managers writing confidently significantly outperform other underperforming managers in the next six months. Further analyses reveal our confidence measure is informationally distinct from the human-based confidence measure, tone, and overstatement (another writing style). Analyses of investors’ capital flows show they are incapable of detecting the information embedded in textual confidence. Our findings suggest that writing styles contain import forward-looking information.
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