Trump election and minority CEO pessimism

Xiaoli Hu, Ya Kang (), Oliver Zhen Li and Yupeng Lin
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Xiaoli Hu: City University of Hong Kong
Ya Kang: The Chinese University of Hong Kong
Oliver Zhen Li: National University of Singapore
Yupeng Lin: National University of Singapore

Review of Accounting Studies, 2025, vol. 30, issue 1, No 24, 950-993

Abstract: Abstract Ethnic tension in the United States became more salient after Donald Trump’s election on November 9, 2016. Exploring the variation in management forecasts, we show that after the Trump election, minority CEOs exhibit more pessimism in their earnings forecasts (underestimation of the mean of earnings), compared with their non-minority counterparts. This tendency toward pessimism is observed across CEOs from various minority groups and is particularly pronounced in firms led by less experienced or less confident minority CEOs. Further analyses reveal that minority CEOs make less specific and less precise forecasts. Minority CEO pessimism is not explained by alternative explanations including terrorist attacks and minority CEOs’ political ideology. Collectively, our research provides evidence that the Trump election induces biased beliefs in the form of pessimism in ethnic minority CEOs.

Keywords: Ethnic threat; CEO pessimism; Management forecast; Trump election (search for similar items in EconPapers)
JEL-codes: D72 D91 G14 J15 M41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11142-024-09843-7

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