The Hidden Influence of Causal Reasoning in Earnings Releases: Insights from a European Perspective

This study investigates the linguistic features of accounting narratives in earnings releases issued by large European companies, focusing on significantly frequent words (i.e., keywords) and phrases, particularly the adverb mainly and the prepositional connectors due to and attributable to. I identified keywords based on keyness, indicating words that occur with significantly higher frequency in the corpus of earnings releases relative to a reference corpus, specifically, the Corpus of Contemporary American English (COCA). By conducting a quantitative and qualitative analysis of the key words and phrases in nearly 1,000 earnings releases, the research reveals that the communicative purpose of these financial narratives extends beyond mere information delivery to encompass persuasive strategies aimed at managing perceptions and reinforcing the truth-value of financial statements. The analysis demonstrates that the prepositional connectors serve critical pragmatic functions, facilitating logical reasoning that connects outcomes with their underlying causes. The findings suggest that while addressing information asymmetry, firms also strategically use these narratives to influence investor perceptions. This research not only contributes to the understanding of strategic corporate communication but also highlights the need for further exploration of causal connectives in the context of investor decision-making.