Board characteristics and negative disclosure tone

Purpose Negative disclosure tone in 10-K annual reports has economic consequences, yet relatively little is known about how it generated. Boards of directors play an important governance role with respect to mandatory disclosures and personally sign off on Form 10-K, leading us expect influence financial reporting narratives. This study investigates whether the negative firms' narrative report associated human social capital its board directors. Design/methodology/approach Multivariate regression analyses (Loughran McDonald, 2011) members' average age, gender, education, expertise turnover performed. A host supplemental tests corroborate our primary analysis, including using Sarbanes-Oxley's expert mandate as exogenous shock composition, impact threshold for a confounding variable, placebo portfolio more less disclosing firms “loud” versus “quiet” boards are conducted. Findings Evidence that directors' tone, while age found. The also looked within differentiate these findings driven by characteristics inside or outside serving audit committee, both, specific groups we would disclosure. It was found lower bid-ask spread, so this interpreted containing descriptive information. Originality/value helps decode “black box” which Loughran McDonald (2011) show implications. results help inform stakeholders such policymakers, executives market participants member traits particularly bears witness increasing prominence gender/diversity mandates (e.g. Israel, Norway, California) Sarbanes-Oxley).