Hendricks, Bradley E.
[Verfasser:in]
;
Lang, Mark H.
[Sonstige Person, Familie und Körperschaft];
Merkley, Kenneth J.
[Sonstige Person, Familie und Körperschaft]
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 1, 2018 erstellt
Beschreibung:
We examine whether textual attributes of firms' regulatory filings reflect CEO characteristics and whether investors consider this relation when assessing firm value. We build on prior research that shows founders have unique personality attributes, particularly overoptimism. We find that 10-K text for founder-led firms is characterized by “excess” optimism relative to current and future realized earnings and relative to non-founder-led firms. The effect is mitigated for firms with large auditors, high litigation risk and high analyst following. Based on stock price at the 10-K release, investors do not appear to appropriately discount the tone, resulting in predictable negative returns during the year subsequent to the 10-K release, particularly for the first two years after firms go public. To bolster the conclusion that CEOs influence text, we provide broad sample evidence that CEO fixed effects are significantly related to several textual attributes