Are Young and Female CEOs More Forthcoming with Earnings Forecasts?

We investigate the effect of the career concerns of young CEOs and of female CEOs on their willingness to issue voluntary earnings forecasts. We argue that the labor market’s perception about a young CEO’s uncertain talent leads to a stronger desire to establish a good reputation by issuing more voluntary earnings forecasts, particularly when the news is positive. We also argue that the negative, stereotype-based expectations against female CEOs create a stronger challenge, which leads female CEOs to issue more earnings forecasts regardless whether the news is positive or negative. Finally, we predict that high compensation reduces young CEOs’ and female CEOs’ incentives to issue earnings forecast. Using 46,596 firm-quarter management earnings forecasts from 1996 to 2010, we find empirical support for all our hypotheses.