We examine the relationship between corporate teamwork culture and firms’ voluntary disclosure, specifically management earnings forecast quality. A new measure of corporate teamwork culture is used, which was calculated using a machine learning approach to analyze earnings call transcripts through a novel word embedding model. We find that firms with stronger corporate teamwork culture are more likely to issue earnings forecasts and file 8‐K forms. Further analysis reveals that the corporate teamwork culture score is positively associated with the quality of management earnings forecast. It implies that firms with a stronger teamwork culture issue more accurate earnings forecasts as human harmony cooperation and strong employee responsibility help reduce errors in earnings forecasts. Our new empirical results contribute to the voluntary disclosure and corporate culture literature.
This study investigates whether firms' financial leverage affects earnings predictability. I posit and find that earnings predictability is negatively associated with firms' leverage. Further analyses using an instrumental variable and a difference-indifferences approach reveal a causal, adverse effect of financial leverage on earnings predictability. This effect is more salient for firms with higher default risk, higher cash effective tax rate volatility, and when economic policy uncertainty is higher. Taken together, my findings provide evidence on the causal effect of firms' leverage on earnings predictability through the riskiness channel. More importantly, by highlighting the role of firms' debt in influencing earnings predictability, my study contributes to our understanding of the relation between management decisions on debt contracting and earnings properties.
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