The role of CEO accounts and perceived integrity in analysts’ forecasts

Daniel Skarlicki, Kin Lo, Rafael Rogo, Bruce J. Avolio and CodieAnn DeHaas

Organizational Behavior and Human Decision Processes, 2023, vol. 176, issue C

Abstract: Although holding oneself accountable is deemed important for effective leadership, CEOs tend to demonstrate a self-serving tendency when reporting their company’s performance to the financial community. Leaders do so by providing internal accounts for favorable performance and external accounts for unfavorable performance. The effects of this strategy on the financial community’s judgments of a company’s value, however, is frequently mixed. Guided by the actor-observer perspective, we propose that observers (i.e., analysts) are likely to provide higher forecasts for firms whose CEOs attribute unfavorable organizational outcomes to internal factors and favorable outcomes to external factors. Integrating this conceptual perspective with attribution theory, we predicted that CEO accounts will have a stronger influence on analysts’ forecasts when the company performs unfavorably versus favorably. Results of archival data analysis (N = 35,676 quarterly earnings conference calls) generally supported our hypothesis, and were then replicated in a pre-registered follow-up field experiment (Study 2; N = 307), showing that analysts’ perceptions of the leader’s integrity mediated the effects of CEO accounts on analysts’ evaluation of the company. The mediating role of leader integrity was only significant when the company performed unfavorably (versus favorably). The present research adds to theory on causal accounts and perceived leader integrity, while offering guidance on how leaders’ accounts can relate to observers’ evaluations of those leaders and their companies.

Keywords: CEO causal accounts; CEO perceived integrity; Financial analysts’ forecasts; Self-serving bias; Actor-observer perspective (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0749597823000250
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:jobhdp:v:176:y:2023:i:c:s0749597823000250

DOI: 10.1016/j.obhdp.2023.104250

Access Statistics for this article

Organizational Behavior and Human Decision Processes is currently edited by John M. Schaubroeck

More articles in Organizational Behavior and Human Decision Processes from Elsevier
Bibliographic data for series maintained by Catherine Liu ().