Dynamics of CEO Disclosure Style
Posted: 2 Jul 2016 Last revised: 8 Nov 2019
Date Written: October 2, 2018
We examine changes in CEOs' disclosure styles in quarterly earnings conference calls, over their tenure. Our longitudinal analysis of newly hired CEOs shows that CEOs' forward-looking disclosures and their disclosures' relative optimism decline in their tenure. Further, externally hired and inexperienced CEOs are more future-oriented and younger CEOs exhibit greater optimism in their disclosures. We also find that non-CEO executives' disclosure styles remain time-invariant over their CEO's tenure. Our evidence is consistent with uncertainty reduction about managers' ability over their tenure 1) reducing the demand for and the supply of forward-looking disclosures, and 2) attenuating managerial career concerns leading to the decline in disclosure optimism.
Keywords: CEO tenure, ability uncertainty, career concerns, communication style, forward-looking information, linguistic tone, earnings conference calls, textual analysis
JEL Classification: D82, D83, L20, M12, M51
Suggested Citation: Suggested Citation