The Effect of CEO Career Concerns on Optimistic Disclosure Tone

Document Type : Research Paper

Authors

1 Assistant Professor. Faculty of management, economic& accounting, payame noor University, Tehran, Iran

2 MSc. Student in Accounting, pnu university, tehran, Iran

Abstract

- Purpose
The tone of disclosure of reports can have signaling value for high-performing executives. The purpose of this study is to investigate the effect of CEO Career Concerns on CEOs' optimistic disclosure tone, as well as the role of managerial ability in this influence and communication.
 
2- Hypotheses
The research hypotheses are:
- CEO job concern (first three years of tenure) has a significant effect on Optimistic disclosure tone.
- The CEO's tenure has a significant effect on the Optimistic disclosure tone.
- The last year of the CEO's tenure has a significant effect on the Optimistic disclosure tone.
- The CEO's ability has a positive and significant effect on the Optimistic disclosure tone.
-The CEO's ability moderates the effect of the CEO's job concern on the Optimistic disclosure tone.
 
3- Method
The sample includes 119 companies of the Tehran Stock Exchange in the period of 2010-2022. Data for measuring the variables were collected from the Codal website and the firms' financial statements; preliminary calculations were made in Excel; then, the research hypotheses were analysed and tested using a multivariate regression model with panel data in Stata and Eviwes software.
 
4- Results
            The results show that the CEO Career Concerns has a negative and significant effect on the optimistic tone of disclosure, and management ability has a positive effect on the optimistic tone of disclosure. Also, high-ability CEOs tend to use a more optimistic tone, especially in the early years of their tenure. That is, CEOs with higher ability use an optimistic tone to demonstrate their superior skills. The findings also show that in the last year of tenure, CEOs reduce the level of using positive words in financial reports. Capable managers in the last year of their activity in the company, to show that they have performed well and leave the company in a good state, maintain the approach of using an optimistic tone in presenting the interpretive reports of the board of directors.
 Overall, the findings of this study suggest that CEOs develop recognizable patterns in their career-related narrative disclosures, and that optimistic disclosures reflect the true optimism of highly skilled CEOs early in their careers.
 
5- Discussion and Conclusion
Optimistic tone diminishes or disappears as CEOs grow older or in their final years of responsibility, as CEOs become more conservative and risk averse as their tenure increases.
 
Keywords: CEO career concerns, optimistic disclosure tone, reporting, CEO ability
 
 
 

Keywords

Main Subjects

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History

  • Receive Date: 09 May 2023
  • Revise Date: 13 November 2023
  • Accept Date: 13 November 2023

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