EconPapers    
Economics at your fingertips  
 

CEO characteristics and tone at the top inconsistency

Pu Liu and Hazel T. Nguyen

Journal of Economics and Business, 2020, vol. 108, issue C

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)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148619519301833
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

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 Kenneth J. Kopecky

More articles in Journal of Economics and Business from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-06-13
Handle: RePEc:eee:jebusi:v:108:y:2020:i:c:s0148619519301833