Board characteristics and disclosure tone

Research output: Contribution to conferencePaperScientific


We examine the role of corporate boards of directors in shaping disclosure tone. Boards of directors play an important governance role (Beasley, 1996), leading us to expect boards of directors to influence financial reporting narratives. Specifically, we investigate whether the tone of firms’ narrative disclosures provided in annual 10-K reports is associated with the age, gender uniformity, human capital, and turnover of its board of directors. Analyzing a large sample of SEC registrants from 2003 to 2014, the results indicate that directors’ age is negatively associated with negative, positive and uncertain disclosure tone, but positively associated with litigious tone. These results are consistent with older directors being risk averse, contributing to cautious reporting. Meanwhile, gender uniformity is positively related to negative and uncertain tone and negatively related to positive tone while human capital is positively associated with all four types of tone: negative, positive, uncertain, and litigious, indicative of richer narrative disclosures. Board turnover is positively associated with negative and litigious tone yet negatively associated with positive and uncertain tone, suggesting that new directors bring their own disclosure styles that fade over time. Overall, our study helps decode the “black box” of disclosure tone which Loughran and McDonald (2011) show has important economic implications.
Original languageEnglish
Publication statusPublished - 2018
EventNordic Corporate Governance Network Conference
- Reykjavik University, Reykjavik, Iceland
Duration: 7 Jun 20179 Jun 2017
Conference number: 9


WorkshopNordic Corporate Governance Network Conference


  • Board of directors
  • annual report
  • 10-K
  • tone
  • narrative disclosure


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