Premium
Disclosure tone management and labor unions
Author(s) -
ArslanAyaydin Özgür,
Thewissen James,
Torsin Wouter
Publication year - 2020
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/jbfa.12483
Subject(s) - negotiation , earnings , tone (literature) , deflation , value (mathematics) , affect (linguistics) , order (exchange) , labour economics , economics , business , monetary economics , accounting , psychology , finance , political science , law , art , literature , monetary policy , communication , machine learning , computer science
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.