IDEAS home Printed from https://ideas.repec.org/p/ajf/louvlr/2021006.html
   My bibliography  Save this paper

Does managerial ability affect disclosure? Evidence from earnings press releases

Author

Listed:
  • Yan, Beibei
  • Arslan-Ayaydin, Özgür
  • Thewissen, James

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Torsin, Wouter

Abstract

Using a sample of about 24,000 earnings press releases by S&P1500 firms between 2004 and 2013, we find that low-ability managers inflate the disclosure tone to positively influence labor market's perceptions about their ability. This effect is magnified for younger and shorter-tenured managers, for firms with more intense monitoring and during bear markets. We also show that the tone of earnings press releases of low-ability managers is less informative to predict future firm performance and results in a lower stock price reaction. Overall, our findings confirm that managerial ability affects the credibility of qualitative information.

Suggested Citation

  • Yan, Beibei & Arslan-Ayaydin, Özgür & Thewissen, James & Torsin, Wouter, 2021. "Does managerial ability affect disclosure? Evidence from earnings press releases," LIDAM Reprints LFIN 2021006, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlr:2021006
    DOI: https://doi.org/10.1108/ARA-03-2020-0036
    Note: In: Asian Review of Accounting, 2021, vol. 29(2), p. 192-226
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Özgür, Arslan-Ayaydin & Thewissen, James & Torsin, Wouter, 2021. "Earnings Management Methods and CEO Political Affiliation," LIDAM Discussion Papers LFIN 2021017, Université catholique de Louvain, Louvain Finance (LFIN).
    2. Westfall, Tiffany J. & Myring, Mark, 2022. "Are voluntary internal control weakness disclosures in initial public offerings associated with managerial ability and subsequent financial reporting quality?," Advances in accounting, Elsevier, vol. 59(C).
    3. Kim, Bumjoon & Koo, Minjae, 2024. "Managerial ability and firm’s tweeting activity," Research in International Business and Finance, Elsevier, vol. 69(C).
    4. Sharad Asthana & Rachana Kalelkar, 2023. "Effect of geomagnetic activity on investors and managers: evidence from the pricing and timing of disclosure of earnings news," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 31(3), pages 387-413, February.

    More about this item

    Keywords

    Managerial ability; Tone management; Tone informativeness; Career concerns; Earnings press releases;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ajf:louvlr:2021006. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Séverine De Visscher (email available below). General contact details of provider: https://edirc.repec.org/data/lfuclbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.