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Please use this identifier to cite or link to this item: https://dspace.lboro.ac.uk/2134/27147

Title: Optimistic disclosure tone and conservative debt policy
Authors: Ataullah, Ali
Vivian, Andrew J.
Xu, Bin
Keywords: Managerial optimism
Debt conservatism
Cash
Dividend
Tone analysis
Insider trading
Issue Date: 2017
Publisher: Wiley
Citation: ATAULLAH, A., VIVIAN, A.J. and XU, B., 2017. Optimistic disclosure tone and conservative debt policy. Abacus, In Press.
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 our 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.
Description: This paper is in closed access until 24 months after publication.
Version: Accepted for publication
URI: https://dspace.lboro.ac.uk/2134/27147
Publisher Link: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-6281
ISSN: 0001-3072
Appears in Collections:Closed Access (Business School)

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