Numerous studies have examined the information content of financial statements' line items such as earnings, earnings components, and financial ratios. Most of these studies examined the cross-sectional association between firm-specific stock returns and one or more financial statements' line items. Surprisingly, the information contained in the narrative portions of the annual report — the president's letter to the firm's shareholders and the Management Discussion and Analysis (MD&A) — has not received much attention.
Abrahamson, Eric, and Eli Amir. "The Information Content of the President's Letter to Shareholders." Journal of Business Finance and Accounting 23, no. 8 (December 1996): 1157-1182.
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