Companies deliberately put a more positive spin on financial report headlines, successfully manipulating investor perceptions and boosting stock prices, finds new research from the Nazarbayev University Graduate School of Business.

Prof Doron Israeli from NU GSB, and his co-authors from Luiss University and Stanford University, analysed over 18,000 earnings guidance press releases from more than 3,600 companies, measuring sentiment in titles, opening paragraphs, and the full text using a financial language AI model. In financial reporting, firm earnings guidance press releases provide details on economic performance, position, and outlook.

The researchers found that the titles of earnings guidance are more positive than the actual content. This framing was deliberate on the part of the firm, as AI-generated titles for the actual earnings guidance content and independent media coverage of earnings guidance did not show the same positive skew.

Positive titles were also found to drive higher stock prices. When the title of an earnings guidance press release was more positive, the stock price increased more than expected, even when actual financial disclosure was neutral or negative.

“In a world where attention spans are shrinking and investors make quick decisions, the title of a disclosure becomes a strategic gateway. Companies understand that and they use it,” says Prof Doron Israeli.

Current regulations do not govern the use of sentiment in earnings guidance, but this research demonstrates that sentiment is being deliberately and strategically used to manipulate investor perception and achieve stock market outcomes. The researchers argue that if sentiment alone can sway market behaviour, perhaps this is a regulatory blind spot that needs addressing.