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Uncertain text and price reactions to earnings releases
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DOI：10.1016/j.jbankfin.2025.107580.png)
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Abstract
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We explore how the uncertain text in 10-K/Qs, a form of soft information, affects the stock price reactions to subsequent earnings releases that contain hard and quantitative information. We find that more uncertain language in 10-K/Qs leads to stronger immediate price reactions to earnings surprises but weaker post-earnings announcement drifts. Firms with higher text uncertainty in 10-K/Qs also attract greater institutional attention and more intense trading activity by sophisticated investors around earnings announcements. These findings suggest that firms using more uncertain language in regulatory filings have higher fundamental uncertainty and attract more attention from attention-constrained investors.
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