Attribution bias refers to the tendency of people to attribute successes to their own abilities but failures to external factors. In a business context an internal factor might be the restructuring of the firm and an external factor might be an unfavourable change in exchange or interest rates. In accounting research, the presence of an attribution bias has been demonstrated for the narrative sections of the annual financial reports. Previous studies have applied manual content analysis to this problem but in this paper we present novel work to automate the analysis of attribution bias through using machine learning algorithms. Previous studies have only applied manual content analysis on a small scale to reveal such a bias in the narrative section of annual financial reports. In our work a group of experts in accounting and finance labelled and annotated a list of 32,449 sentences from a random sample of UK Preliminary Earning Announcements (PEAs) to allow us to examine whether sentences in PEAs contain internal or external attribution and which kinds of attributions are linked to positive or negative performance. We wished to examine whether human annotators could agree on coding this difficult task and whether Machine Learning (ML) could be applied reliably to replicate the coding process on a much larger scale. Our best machine learning algorithm correctly classified performance sentences with 70% accuracy and detected tone and attribution in financial PEAs with accuracy of 79%.

In this paper we present the evaluation of our automatic methods for detecting and extracting document structure in annual financial reports. The work presented is part of the Corporate Financial Information Environment (CFIE) project in which we are using Natural Language Processing (NLP) techniques to study the causes and consequences of corporate disclosure and financial reporting outcomes. We aim to uncover the determinants of financial reporting quality and the factors that influence the quality of information disclosed to investors beyond the financial statements. The CFIE consists of the supply of information by firms to investors, and the mediating influences of information intermediaries on the timing, relevance and reliability of information available to investors. It is important to compare and contrast specific elements or sections of each annual financial report across our entire corpus rather than working at the full document level. We show that the values of some metrics e.g. readability will vary across sections, thus improving on previous research research based on full texts.