Tone disclosure and debt financing: Empirical study from the banking sector governance

This research examines the relationship between tone disclosure (TD) and debt financing (DF) in the Jordanian banking sector between 2010 and 2019. This research uses the agency theory since it explains TD behavior to reduce information asymmetry and conflict of interest. Based on this theory, the first hypothesis suggests a positive association between TD and DF. Furthermore, the second hypothesis suggests a bidirectional relationship between TD and DF. The sample consists of 15 banks in the Jordanian banking sector. This research calculates TD by dividing the number of positive words by the total number of words. Results show a positive relationship between TD and DF, and the relationship is bidirectional (Hui et al., 2024; Zhu et al., 2023), which proves our two hypotheses. The study results help external financial statement users, mainly financers, understand the use of TD in the annual report in Jordan, one of the emerging countries. Also, the results recommend using TD in a bank’s annual report to attract more debt financers.