Can MD&A tone convey information? Evidence from mismatched firms under unified fiscal years

This study examines how China's uniform fiscal year-end requirement shapes the tone of Management Discussion and Analysis (MD&A). Focusing on cyclical mismatched firms whose reporting cycles do not align with their business cycles, we analyze a sample of A-share listed firms from 2010 to 2022 using multivariate regressions. The empirical findings indicate that cyclical mismatched firms are more likely to adjust the tone of their narrative disclosures. This behavior appears to facilitate effective information transmission rather than merely serving as impression management, particularly among firms with stronger subsequent performance and more robust internal controls. Active tone management by mismatched firms is further associated with a relative reduction in stock price synchronicity and a relative increase in firm valuation compared with their aligned peers, suggesting that it contributes to enhanced capital market efficiency.