Year: 2025
Type: article
Abstract: ABSTRACT This study investigates the impact of narrative R&D disclosure characteristics—readability, sentiment, and quantity—on stock return volatility. A comprehensive longitudinal regression model that includes these three characteristics, along with their interactions with R&D investment intensity, outperforms the other models. The readability of narrative R&D disclosures significantly affects volatility, with more readable disclosures associated with reduced fluctuations. Additionally, readability moderates the effect of R&D investment intensity on volatility. No direct effect of disclosure sentiment on stock return volatility is observed, but disclosure sentiment influences the relation between R&D investment intensity and stock return volatility. Finally, there is a strong positive correlation between the quantity of R&D disclosures and stock return volatility, suggesting that excessive R&D information tends to increase stock return fluctuations. The study provides practical implications for both investors and firms. It suggests that investors may consider R&D disclosure characteristics to better assess the risk of stock return fluctuations when selecting shares of R&D‐intensive firms and offers guidance for firms on delivering clearer and more balanced R&D disclosures to help reduce market volatility.
Source: Financial Planning Review
DOI: 10.1002/cfp2.70014
Authors: Fang Yang, Yu Peng Lin
Institution: University of Detroit Mercy
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,200
OpenAlex ID: W4413207425