Managerial career concerns and the content of corporate disclosures: An analysis of the tone of earnings press releases

Özgür Arslan-Ayaydin, Norman Bishara, James Thewissen () and Wouter Torsin

International Review of Financial Analysis, 2020, vol. 72, issue C

Abstract: 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.

Keywords: CEO career concerns; Tone management; Earnings press releases; Textual analysis (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:72:y:2020:i:c:s1057521920302416

DOI: 10.1016/j.irfa.2020.101598

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