Ataullah, A, Vivian, A and Xu, B orcid.org/0000-0003-3512-5834 (2018) Optimistic Disclosure Tone and Conservative Debt Policy. Abacus, 54 (4). pp. 445-484. ISSN 0001-3072
Abstract
We examine the relationship between managerial optimism and debt conservatism (i.e., the low‐leverage puzzle). Our analysis demonstrates that optimistic tone, our time‐varying optimism measure, significantly decreases leverage. This evidence supports the proposition that optimistic managers who consider external financing as unduly costly use debt conservatively. This reduced reliance on external financing can be explained by further evidence that optimistic tone significantly increases cash holdings and decreases dividend payment. The negative tone–leverage relation is stronger in the presence of high insider purchase of own stocks, which confirms that optimistic tone reflects managerial optimism. This study suggests that managerial optimism can help explain the low‐leverage puzzle.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2018 Accounting Foundation, The University of Sydney. This is the peer reviewed version of the following article: Ataullah, A. , Vivian, A. and Xu, B. (2018), Optimistic Disclosure Tone and Conservative Debt Policy. Abacus, which has been published in final form at https://doi.org/10.1111/abac.12140. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. |
Keywords: | Managerial optimism; Debt conservatism; Cash Dividend; Tone analysis; Insider trading |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 18 Oct 2017 13:36 |
Last Modified: | 30 Sep 2020 00:38 |
Status: | Published |
Publisher: | Wiley |
Identification Number: | 10.1111/abac.12140 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:122532 |