Understanding Corporate Behavior in Relation to the Optimism Expressed in Annual Reports: Data on Companies in the EU-27
Alexandra Stefan ORCID ↗ · Mihai-Daniel Gavrila ORCID ↗
International Journal of Research in Business and Social Science · 2026 · Vol. 15 / Issue 6 · 57-71
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Abstract
This study aims to investigate the relationship between the language used by companies in their official communications and their financial performance, as well as their tax compliance, based on the hypothesis that the optimistic tone reflected in annual and sustainability reports may be associated with specific economic outcomes. The analysis is based on a sample of 231 companies in the European Union for the year 2024. More specifically, the research aims to quantify the degree of optimism in corporate discourse using text analysis methods and to examine how it correlates with key financial indicators, namely profitability. At the same time, the study includes a tax component, analyzing the relationship between the tone of communication and the effective tax rate to determine whether there are trends indicating that companies with more positive discourse also exhibit specific tax behaviors. The results suggest that profitability is negatively associated with optimism, while, after conducting robustness tests, there is insufficient evidence to support a relationship between the degree of tax compliance and an optimistic tone. Through this approach, the study contributes to the literature on corporate transparency and non-financial reporting, offering insights into the extent to which the narrative style adopted by companies may signal actual performance or, conversely, may be used as a strategic tool to influence the perceptions of investors and other stakeholders. To the best of our knowledge, the literature does not provide an in-depth analysis of profitability and tax compliance components simultaneously, nor of their impact on corporate discourse.
Keywords: {'name': 'Corporate reporting; optimism; profitability; tax compliance'}
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Alexandra Stefan
Affiliation not supplied
Mihai-Daniel Gavrila
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