CEO political ideology and voluntary forward-looking disclosure

Abstract

This study investigates whether and, if so, how the information disclosure preferences differ systematically between Republican CEOs and Democrat CEOs in the context of management earnings forecasts. We find that Republican CEOs tend to prefer a less asymmetric information environment than Democrat CEOs, and thus make more frequent, timelier, and more accurate disclosures than Democrat CEOs. Results using the propensity score matched sample and the difference-in-differences analysis show that our results are unlikely to be driven by potential endogeneity. Our results are robust to controlling for various CEO characteristics, including personal characteristics, compensation incentives, overconfidence, and managerial ability, and are stronger for firms with higher levels of institutional ownership and litigation risk.

Keywords: CEO Political Ideology; Management Earnings Forecasts; Conservatism; Information disclosure; Republican versus Democrat.

JEL Classification: D82, M41, P16, G34, G40