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Political euphoria and corporate disclosures: An investigation of CEO partisan alignment with the president of the United States

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  • Arikan, Mazhar
  • Kara, Mehmet
  • Masli, Adi
  • Xi, Yaoyi

Abstract

We examine how the partisan alignment between chief executive officers (CEOs) and the United States president influences corporate disclosure outcomes. We predict and find evidence that more partisan-aligned CEOs display greater optimism in their corporate disclosures. CEO partisan alignment is positively associated with the likelihood of issuing a management earnings forecast and issuing overly optimistic forecasts. More partisan-aligned CEOs also use a more optimistic tone in the corporate disclosure and exhibit a lower level of accounting conservatism. Our findings suggest that time-varying beliefs of CEOs formed by the political environment can shape corporate disclosures.

Suggested Citation

  • Arikan, Mazhar & Kara, Mehmet & Masli, Adi & Xi, Yaoyi, 2023. "Political euphoria and corporate disclosures: An investigation of CEO partisan alignment with the president of the United States," Journal of Accounting and Economics, Elsevier, vol. 75(2).
    • Handle: RePEc:eee:jaecon:v:75:y:2023:i:2:s0165410122000751
    DOI: 10.1016/j.jacceco.2022.101552
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