CEO Ability Uncertainty, Career Concerns and Voluntary Disclosure

• In Event: Disclosure and Managerial Ability

Abstract

We examine changes over time in newly hired CEOs' disclosure styles in quarterly earnings conference calls. Our longitudinal (post-appointment event-time) analysis shows that CEOs' forward-looking disclosures and their relative optimism decline in their tenure, whereas other (non-CEO) executive participants' disclosure styles do not change with their CEO's tenure. Also, CEOs with greater career concerns are more future-oriented and exhibit greater optimism in their disclosures. Our results are robust to alternative empirical choices regarding sampling, specifications and measures. Overall, our evidence is consistent with uncertainty reduction about management ability, over time, lowering investor demand for information and attenuating managerial career concerns.

Authors

• Khrystyna Bochkay, University of Miami

• Dhananjay Nanda, University of Miami

• Roman Chychyla, University of Miami