Political information flow and management guidance

Dane M. Christensen (), Arthur Morris (), Beverly R. Walther () and Laura A. Wellman ()
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Dane M. Christensen: University of Oregon
Arthur Morris: Clear Water Bay
Beverly R. Walther: Kellogg School of Management at Northwestern University
Laura A. Wellman: Pennsylvania State University

Review of Accounting Studies, 2023, vol. 28, issue 3, No 10, 1466-1499

Abstract: Abstract We examine whether politically connected firms play a role in disseminating political information via their management guidance. Using campaign financing activity or the presence of a government affairs office to proxy for firms’ access to political information, we find that politically connected firms are more likely to issue management guidance, and their guidance is more likely to discuss government policies. Further, these relations are attenuated for firms facing high proprietary costs of disclosure. To provide evidence on the source of the political information disclosed through guidance, we examine the timing of when guidance is issued. We find that politically connected firms are more likely to issue guidance and change their government policy–related disclosures prior to the public revelation of government policy decisions. Collectively, these findings suggest that the privileged information firms obtain through their political connections is shared with investors through voluntary disclosures.

Keywords: Political connections; Information flow; Management forecasts; Corporate disclosure (search for similar items in EconPapers)
JEL-codes: D82 D83 G14 G38 M41 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11142-022-09671-7

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