CEO career concerns; Tone Management; Earnings press releases; Textual analysis
Abstract :
[en] This study examines how the narrative content of corporate disclosures is affected by managers’ career concerns, measured by the enforceability of noncompete provisions in employment contracts. We provide empirical evidence that career concerns lead managers to manipulate the content of corporate disclosures by inflating the tone of earnings press releases to convey a more optimistic picture about the firm’s financial performance. We ensure the causality of our findings by exploiting changes to noncompete enforceability following court rulings. We also show that tone inflation is stronger when CEOs are younger, less capable and less experienced, as well as for managers of firms with more independent boards, more analysts following and better governance.
Disciplines :
Finance
Author, co-author :
Arslan-Ayaydin, Ozgur; University of Illinois at Chicago > Department of Finance
Bishara, Norman; University of Michigan > Ross School of Business
Thewissen, James; Université Catholique de Louvain - UCL > Department of Finance
Torsin, Wouter ; Université de Liège - ULiège > HEC Liège : UER > Financial Reporting and Audit
Language :
English
Title :
Managerial career concerns and the content of corporate disclosures: An analysis of the tone of earnings press releases
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