Work

Disclosure tone management and labor unions

Year: 2020

Type: article

Abstract: By analyzing the influence of labor unions on the narrative content of corporate disclosures, we provide empirical evidence that managers deflate the tone of earnings press releases in order to convey to unions a less optimistic image of firm financial performance. We find that the tone of the qualitative information in earnings press releases is significantly less optimistic as the degree of unionization increases, and particularly when financial performance is strong. The results of quasi‐natural experiments suggest that labor unions causally affect the use of tone deflation, and the deflation is stronger during labor negotiations. Our findings also indicate that labor unions lead to a significant weakening of the signaling value of the tone of earnings press releases in predicting future performance.

Source: Journal of Business Finance &amp Accounting

DOI: 10.1111/jbfa.12483

Authors: Özgür Arslan‐Ayaydin, James Thewissen, Wouter Torsin

Institutions: University of Illinois Chicago, UCLouvain, KU Leuven, University of Liège

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funder: Fonds Wetenschappelijk Onderzoek