Wen-Gang Guan

Can Annual Report Tone Signal Audit Risk? Evidence from Large Language Model Textual Analysis of Chinese Listed Firms

Using a sample of Chinese A-share listed firms from 2021 to 2024, we employ a large language model (LLM) to measure the tone of approximately 20,000 Management Discussion and Analysis (MD&A) sections and examine whether narrative tone signals future audit risk. We document four findings. First, MD&A tone significantly...