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Analyzing Speech to Detect Financial Misreporting

Publication ,  Journal Article
Hobson, JL; Mayew, WJ; Venkatachalam, M
Published in: Journal of Accounting Research
May 1, 2012

We examine whether vocal markers of cognitive dissonance are useful for detecting financial misreporting. We use speech samples of CEOs during earnings conference calls, and generate vocal dissonance markers using automated vocal emotion analysis software. We begin by assessing construct validity for the software-generated dissonance markers by correlating them with four dissonance-from-misreporting proxies obtained in a laboratory setting. We find a positive association between these proxies and vocal dissonance markers generated by the software, suggesting the software's dissonance markers have construct validity. Applying the software to CEO speech, we find that vocal dissonance markers are positively associated with the likelihood of irregularity restatements. The diagnostic accuracy levels are 11% better than chance and of similar magnitude to models based solely on financial accounting information. Moreover, the association between vocal dissonance markers and irregularity restatements holds even after controlling for financial accounting and linguistic-based predictors. Our results provide new evidence on the role of vocal cues in detecting financial misreporting. © 2011, University of Chicago on behalf of the Accounting Research Center.

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Published In

Journal of Accounting Research

DOI

EISSN

1475-679X

ISSN

0021-8456

Publication Date

May 1, 2012

Volume

50

Issue

2

Start / End Page

349 / 392

Related Subject Headings

  • Accounting
  • 3502 Banking, finance and investment
  • 3501 Accounting, auditing and accountability
  • 1502 Banking, Finance and Investment
  • 1501 Accounting, Auditing and Accountability
 

Citation

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Hobson, J. L., Mayew, W. J., & Venkatachalam, M. (2012). Analyzing Speech to Detect Financial Misreporting. Journal of Accounting Research, 50(2), 349–392. https://doi.org/10.1111/j.1475-679X.2011.00433.x
Hobson, J. L., W. J. Mayew, and M. Venkatachalam. “Analyzing Speech to Detect Financial Misreporting.” Journal of Accounting Research 50, no. 2 (May 1, 2012): 349–92. https://doi.org/10.1111/j.1475-679X.2011.00433.x.
Hobson JL, Mayew WJ, Venkatachalam M. Analyzing Speech to Detect Financial Misreporting. Journal of Accounting Research. 2012 May 1;50(2):349–92.
Hobson, J. L., et al. “Analyzing Speech to Detect Financial Misreporting.” Journal of Accounting Research, vol. 50, no. 2, May 2012, pp. 349–92. Scopus, doi:10.1111/j.1475-679X.2011.00433.x.
Hobson JL, Mayew WJ, Venkatachalam M. Analyzing Speech to Detect Financial Misreporting. Journal of Accounting Research. 2012 May 1;50(2):349–392.
Journal cover image

Published In

Journal of Accounting Research

DOI

EISSN

1475-679X

ISSN

0021-8456

Publication Date

May 1, 2012

Volume

50

Issue

2

Start / End Page

349 / 392

Related Subject Headings

  • Accounting
  • 3502 Banking, finance and investment
  • 3501 Accounting, auditing and accountability
  • 1502 Banking, Finance and Investment
  • 1501 Accounting, Auditing and Accountability