 CEO characteristics and tone at the top inconsistencyPu Liu and Hazel T. Nguyen Journal of Economics and Business, 2020, vol. 108, issue C, No S0148619519301833 Abstract: This paper provides evidence that different corporate disclosures have different roles and that Chief Executive Officer’s (CEO) characteristics influence language choices. We document that relative to the Management Discussion and Analysis (MD&A), CEO letters to shareholders have more positive tone when describing the same firm performance. While the MD&A provides incremental information to the numerical data in the financial statements, the language in the CEO letter is largely inconsistent with current firm performance and is influenced predominantly by the level of positive words. This inconsistency is attributed to overconfident CEOs, who tend to have an overly positive view of their ability and firm prospects while underestimating firm risk. Further analysis indicates that CEO gender also affects CEO letter language style, with female CEOs using more neutral tone. Taken together, our evidence suggests that CEO letters are an important source of corporate disclosures, which is shaped by CEO characteristics. Keywords: Corporate disclosures; Textual analysis; CEO letters; Tone; Executive overconfidence; Executive gender (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:108:y:2020:i:c:s0148619519301833 DOI: 10.1016/j.jeconbus.2019.105887 Access Statistics for this article Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter More articles in Journal of Economics and Business from Elsevier |
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