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Trump election and minority CEO pessimism

Author

Listed:
  • Xiaoli Hu

    (City University of Hong Kong)

  • Ya Kang

    (The Chinese University of Hong Kong)

  • Oliver Zhen Li

    (National University of Singapore)

  • Yupeng Lin

    (National University of Singapore)

Abstract

Ethnic tension in the United States became more salient after Donald Trump’s election on November 9, 2016. Exploring the variation in management forecasts, we show that after the Trump election, minority CEOs exhibit more pessimism in their earnings forecasts (underestimation of the mean of earnings), compared with their non-minority counterparts. This tendency toward pessimism is observed across CEOs from various minority groups and is particularly pronounced in firms led by less experienced or less confident minority CEOs. Further analyses reveal that minority CEOs make less specific and less precise forecasts. Minority CEO pessimism is not explained by alternative explanations including terrorist attacks and minority CEOs’ political ideology. Collectively, our research provides evidence that the Trump election induces biased beliefs in the form of pessimism in ethnic minority CEOs.

Suggested Citation

  • Xiaoli Hu & Ya Kang & Oliver Zhen Li & Yupeng Lin, 2025. "Trump election and minority CEO pessimism," Review of Accounting Studies, Springer, vol. 30(1), pages 950-993, March.
    • Handle: RePEc:spr:reaccs:v:30:y:2025:i:1:d:10.1007_s11142-024-09843-7
    DOI: 10.1007/s11142-024-09843-7
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    More about this item

    Keywords

    Ethnic threat; CEO pessimism; Management forecast; Trump election;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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