Ceos’ Financial Experience, Pessimistic Tones in Earnings Announcements and Firm Value: Evidence During the Covid-19 Pandemic

Ceos’ Financial Experience, Pessimistic Tones in Earnings Announcements and Firm Value: Evidence During the Covid-19 Pandemic | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Ceos’ Financial Experience, Pessimistic Tones in Earnings Announcements and Firm Value: Evidence During the Covid-19 Pandemic Astrid Rudyanto, Stefani Abigail Phang This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6150474/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This study examines the association between pessimistic tones in earnings announcements and firm value, as well as the role of CEOs’ financial experience during the Covid-19 pandemic. Fixed effects regression was employed to analyze 1,380 firm-year observations from Indonesia Stock Exchange-listed non-financial enterprises during the pandemic. The analysis results indicate that a pessimistic tone in earnings announcements negatively impacts firm value, while the CEO's financial experience reduces this negative effect. The study added to the literature by revealing that CEOs' financial experience acts as a credibility signal for investors, reducing the association between pessimistic tone and firm valuation during pandemic. Earnings announcements CEOs’ Financial experience Signaling Firm value Pessimistic tone 1. Introduction Numerous studies have demonstrated the role of earnings figures in explaining companies’ current and future performance (Duarte et al., 2024 ; Pimentel & Malacrida, 2020 ); future cash flows (Sinnewe et al., 2017 ; Supriyadi, 2018 ); investment decisions (Sumiyana et al., 2023 ); and firm value (Ahmadi & Bouri, 2018 ; Sutopo et al., 2021 ). However, a growing body of research has begun to show interest in the tone of earnings announcements, which is more informative in comparison to ‘hard’ information such as earnings figures (Baginski et al., 2018 ; Davis et al., 2012 a; Demers & Vega, 2010 ). This phenomenon is attributable to the environment of uncertainty that diminished the value relevance of traditional accounting figures, a situation which was more prevalent during the Covid-19 pandemic (D’Augusta & Grossetti, 2023 ; Fabrizi et al., 2023 ; Liu & Sun, 2022 ). Financial crises expose firms’ reporting behavior to intense public scrutiny (Jones et al., 2020 ), prompting them to consider the impression formed by others (Leary & Kowalski, 1990 ), particularly shareholders. One aspect of corporate reporting that shapes shareholders’ impressions is tone (Huang et al. 2014 ; Price et al. 2012 ; Dong et al. 2021). The pandemic encouraged companies to adopt a more pessimistic tone in their earnings announcements to enhance transparency regarding its negative effects on performance (D’Augusta and DeAngelis 2020 ; Ningsih et al. 2021 ). Despite being designed to alleviate negative reactions from shareholders, employing a pessimistic tone in earnings announcements can still adversely affect their perceptions, as suggested by Druz et al. ( 2015 ) and Huang et al. ( 2014 ). The tone employed is not merely an interpretation of the reported financial data, but also reflects management’s viewpoint, outlook and confidence concerning the company's circumstances, leading to a reassessment of its future prospects (Davis & Tama-Sweet 2012 ; Jiang et al. 2019 ; Dong et al. 2021). The negative reaction is compounded by shareholders’ tendency to react more strongly to negative information than to positive (Tetlock et al. 2008 ; Xu et al. 2023 ). This issue is particularly pertinent in scenarios where shareholders are already on high alert due to economic uncertainties arising from the pandemic (Engelhardt et al. 2020 ). As tone reflects management’s viewpoint, the negative effect of a pessimistic tone in earnings announcements on shareholders’ perception should be mitigated by management’s characteristics. This study employs CEOs’ financial experience as a characteristic that can reduce this negative relationship. The study aims to provide empirical evidence regarding the effect of pessimistic tones in earnings announcements on firm value, exploring the role of CEOs’ financial experience as a moderating variable during the Covid-19 pandemic. The research questions were as follows: (1) What is the effect of pessimistic tones in earnings announcements on firm value? and (2) What is the effect of pessimistic tones in earnings announcements on firm value if the CEO has financial experience? The study contributes to the literature in two ways. First, it examines the relationship between pessimistic tones in earnings announcements and firm value in the context of the Covid-19 pandemic, which distinguishes it from previous studies that did not specifically focus on this unique economic environment. The relationship between tone and firm value is a well-established topic in academic literature (Davis et al., 2015 ; Luo & Zhou, 2017 ; Ningsih et al., 2021 ). However, examination of this relationship in the context of the Covid-19 pandemic remains relatively unexplored. Covid-19 provides a natural experimental setting, in which investors are more uncertain of the credibility of earnings information (Fabrizi et al., 2023 ). Therefore, a pessimistic tone in earnings announcement would have had a more severe effect on firm value during the pandemic period. Second, the study fills the research gap by exploring how the pandemic-driven change in communication strategy, combined with the moderating role of CEOs’ financial experience, together influenced shareholder perceptions and firm value. Previous research has investigated various leadership characteristics such as age, gender, personality, ability, experience and power as determinants of tone in corporate disclosures (Bassyouny et al. 2020 ; Buchholz et al. 2018 ; Liu and Nguyen, 2020 ; Luo and Zhou 2019 ). Arslan-Ayaydin et al. ( 2016 ), Davis et al. ( 2015 ), Luo & Zhou ( 2017 ) and Marquez-Illescas et al. ( 2019 ) extend the literature by exploring how these determinants influence shareholder perceptions of tone. However, none of the previous studies explains the moderating role of CEO characteristics on the effect of tone management on firm value. With reference to Hennig et al. ( 2023 ), this study examines managerial characteristics as moderators of the association between pessimistic tone and firm value, rather than as tone drivers using source credibility. The difference between this study and that of Hennig et al. is that ours utilizes CEO experience, specifically financial experience, as a signal of credibility, rather than CEOs’ psychological traits. According to source credibility theory, credibility signals from a sender can lead to varied interpretations of identical messages (Hennig et al., 2023 ). This approach is justified because during the pandemic shareholders tended to rely on peripheral processing, which prevented them from conducting detailed analysis of a CEO's personality (Wong et al., 2021 ). Instead, they captured cues in relation to expertise and trustworthiness from simple information, such as the CEO's financial experience. This is particularly relevant, as financially experienced CEOs addressed concerns regarding unreliable disclosures and poor financial conditions during the pandemic. 1.1. Source Credibility and Investors’ Altered Behavior Source credibility theory posits that individual interpretation of a message is a function of two key factors: source trustworthiness, which encompasses perceived honesty and reliability, and source expertise, defined as the level of competence and understanding regarding the subject matter (Hovland et al., 1953 ; Hovland & Weiss, 1951 ). Extended research on Hovland et al.’s theory yielded parallel results, indicating that higher source credibility enhances recipients' trust in and agreement with the content of the information presented (Birnbaum &Mellers 1983 ; Giffin 1967 ; Hennig et al. 2023 ; Pornpitakpan 2004 ). The Covid-19 pandemic radically changed how the world functions, particularly influencing how investors process information. According to the Elaboration Likelihood Model (ELM), individuals process information through two distinct routes: central processing and peripheral processing (Petty & Cacioppo, 1986 ). Central processing entails a meticulous and thoughtful evaluation of the information presented, typically requiring cognitive engagement. Conversely, peripheral processing relies on superficial cues or heuristics that signal the desirability of the advocated position (Susmann et al., 2022 ). Investors’ cognitive engagement in analyzing detailed financial reports, market trends or economic forecasts decreased during the pandemic. Instead, they based their decisions on familiarity, news sentiment and herding behavior (Bouri et al. 2021 ; Engelhardt et al. 2020 ; Mohanty et al. 2024 ), which demonstrates a tendency toward peripheral processing. Consequently, during the pandemic, investors may have perceived source credibility not as an argument that enhances the reliability of information, but rather as a peripheral cue associating positivity with the message. Employing source credibility theory through the lens of peripheral processing, this study investigates the role of CEOs’ financial experience as a message sender in mitigating shareholders' negative reactions to pessimistic tones in earnings announcements. In times of desperate need for reliable disclosure and financial improvement, their conservative nature, along with the knowledge and capabilities gained by CEOs from their financial experience, can be perceived as cues of trustworthiness and expertise, signalling credibility to shareholders. This signal of credibility will further augment the positive aspects in firm valuation. 1.2. Hypothesis Development The tone used in narrative corporate disclosures arguably provides more valuable information than quantitative disclosures (Baginski et al. 2018 ; Davis et al. 2012 ; Demers and Vega 2010 ), ]as it not only explains firms’ current performance (Hadro et al., 2021 ; F. Li, 2010 ), but also, based on signalling theory, addresses the information asymmetry gap by signalling managers' outlook and confidence about the company's future to shareholders (Arslan-Ayaydin et al. 2020 ; Feldman et al. 2010 ; Henry 2008 ). Consequently, a pessimistic tone in earnings announcements is often perceived unfavorably by shareholders (Feldman et al. 2010 ; Henry 2008 ; Loughran and Mcdonald 2011 ; Luo and Zhou 2017 ), as it is associated with underlying risks and issues within the company (Fu et al. 2021 ; Ningsih et al. 2021 ). Numerous studies have demonstrated the significance of the tone of corporate disclosure in explaining market reactions (Feldman et al. 2010 ; Henry 2008 ; Loughran & Mcdonald 2011 ; Luo & Zhou 2017 ; Huang et al. 2014 ; Price et al. 2012 ; Dong et al. 2021). However, research conducted Elrod ( 2009 ) and Tailab & Burak ( 2021 ) presented contradictory results. Elrod ( 2009 ) argues that unresponsive markets occur because managers do not utilize linguistic tone effectively to communicate with investors, while from the investors' perspective Tailab & Burak ( 2021 ) contend that they still consider quantitative aspects in corporate disclosures when making judgments. However, these studies were conducted under normal circumstances, whereas the pandemic created an environment of unprecedented uncertainty and led to a decline in the value relevance of earnings figures (D’Augusta & Grossetti, 2023 a; Fabrizi et al., 2023 ; G. Liu & Sun, 2022 ). As quantitative data is not able to adequately convey the complexity of firms’ situation, shareholders have turned to tone as a means of obtaining private information possessed by company insiders (Dong et al. 2021). The pandemic not only drove the trend towards the use of pessimistic tones in earnings announcements, but also influenced how shareholders perceive such tones. During the pandemic, market participants' reactions and performance were heavily driven by sentiment, with negative sentiment resulting in adverse reactions (Anastasiou et al., 2022 ; Bai et al., 2023 ; Xia et al., 2024 ). Negative media coverage regarding Covid-19 further contributed to this relationship. Tsileponis et al. ( 2020 ) note that the impact of linguistic tone in corporate disclosures on market reactions is moderated by the tone of media articles. This implies that during the pandemic, the role of pessimistic tones in explaining shareholder reactions became more significant. The correlation between these two variables is compounded by shareholders' tendency to respond more strongly to negative than to positive information (Tetlock et al. 2008 ; Xu et al. 2023 ), particularly during the periods of increased anxiety regarding the economic impacts of the pandemic (Engelhardt et al. 2020 ). H1: Pessimistic tones in earnings announcements had a negative effect on firm value in the Covid-19 era. Previous research indicates that the meaningful characteristics (e.g., managerial experience, power, high education, CEO tenure) of firms’ top management serve as a value-added asset from the perspective of shareholders (Atawnah et al. 2024; Kim and Yoon 2023; Koo 2015; Rakhmayil & Yuce 2011). Recent studies have extended related research to explore how the characteristics of firms’ leaders influence the correlation between tone and the perceptions of shareholders. Studies conducted by Luo and Zhou ( 2017 ), Davis et al. ( 2015 ), Marquez-Illescas et al. ( 2019 ), and Arslan-Ayaydin et al. ( 2016 ) argue and demonstrate that managerial characteristics are a significant factor considered by investors when evaluating firms’ stock value through the tone employed in earnings announcements. Another study conducted by Hennig et al. ( 2023 ) approached the topic from a slightly different perspective. They applied the source credibility theory formulated by Hovland et al. to further explore the dynamic in investors’ reaction to tone in conference calls. According to Hovland & Weiss ( 1951 ), an identical message can be interpreted differently depending on the credibility signals emitted by the sender. Hennig et al. ( 2023 ) found that the credibility of firms’ CEOs as message senders moderates the positive relationship between tone and market reactions. This finding suggests that source credibility serves as an argument that validates shareholders' assessments of the conveyed tone. However, the pandemic altered the manner in which investors utilize available information in their decision-making processes, leading them to perceive source credibility as a peripheral cue that adds a positive aspect to their considerations. The financial experience of CEOs has garnered attention from shareholders, especially in light of the pandemic, which underscored the importance of reliable disclosure and effective financial management. Under such circumstances, CEOs’ financial experience might serve as peripheral cue of credibility (trustworthiness and expertise) that influences shareholders’ decisions. Financial experience fosters a conservative nature that reduces involvement in earnings management practices, thereby enhancing perceived trustworthiness. Furthermore, this experience equipped CEOs with the knowledge and skills essential for managing financial conditions and assisting their company in navigating the challenges posed by the pandemic, which can be perceived as an aspect of expertise. Ultimately, these credibility aspects from financially experienced CEOs shape positive perceptions among shareholders in their evaluations of firms. H2: CEOs’ financial experience reduced the negative effect of pessimistic tones in earnings announcements in the Covid-19 era. 2. Materials and Method 2.1. Sample and Setting The study analyses secondary data from all non-financial companies that were consistently listed on the Indonesian Stock Exchange from 2020 to 2023. Compared to developed countries, developing ones were more severely impacted negatively by the Covid-19 pandemic (Muzindutsi et al., 2022 ). Previous research has also found that the pandemic only affected stock returns and volatility in emerging markets (Harjoto et al., 2021 ). The study focus on Indonesia is relevant, as it wasone of the emerging countries most vulnerable to the impacts of new waves of the Covid-19 virus, which posed a significant threat during the research period. The Indonesian government ranked fourth worst in managing the pandemic globally, which was attributed to unclear and inconsistent information and decision-making processes (Ayuningtyas et al., 2021 ). Consequently, the public tended to be confused about which information to follow, leading them to disregard available guidance (Roziqin et al., 2021 ). The Covid-19 Task Force reported that 20 out of 34 provinces in Indonesia had compliance with Covid-19 regulation rates below the 85% standard set by the government (Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation 2021 ). Additionally, there was a significant drop-off in booster shot uptake in the country (WHO 2021). These factors have rendered the Indonesian economy subject to the uncertainties of the Covid-19 pandemic(UNICEF, 2022). This economic uncertainty has altered CEOs' confidence regarding future earnings, prompting a more pessimistic tone in their earnings announcements. In addition, previous research has found that the negative effect of Covid-19 on firm value wasstronger in countries with less robust institutional systems, such as Indonesia (Hu & Zhang 2021 ; Yan et al. 2022 ). The study first focused on 662 non-financial firms listed on the Indonesian Stock Exchange from 2020 to 2023 and ultimately retained a final sample of 461, with three outlier observations, resulting in 1,380 firm-year observations. The sample was streamlined by eliminating firms that did not have fiscal year-ends on December 31 (seven firms); those with incomplete financial statements (35) or annual reports (41 firms) throughout the observation period; and firms that reported in currencies other than the rupiah (88). Furthermore, 19 firms with inactive trading activities were identified and thus excluded. Finally, because the research required data on CEO experience and textual explanations in the earnings announcement section of the Management's Discussion & Analysis (MD&A), 11 firms that did not provide such information were also excluded. 2.2. Measures The study variables of interest were pessimistic tone, CEOs’ financial experience, and firm value. Referencing previous research, our study measured firm value using a Tobin’s Q proxy, calculated as the sum of market value of common equity and book value of liabilities divided by total assets (D’Amato and Falivena 2020 ; Silva et al. 2019 ). Tobin's Q encapsulates the market's expectations of a company's growth opportunities (Bui et al., 2023 ; Silva et al., 2019 ). Its inherent advantages allow for a more accurate reflection of shareholder perceptions, as shareholders consider not only a company's historical performance, but also its future prospects (Desai et al., 2011 ; Iturriaga & Crisóstomo, 2010 ). To test the hypothesis regarding the relationship between firm value and pessimistic tone, pessimistic tone in earnings announcements was measured using a proxy defined as the difference between pessimistic and optimistic words, divided by the total number of words in the earnings announcement (Hennig et al. 2023 ; Huang et al. 2014 ; Luo& Zhou 2017 ). This measurement captured the overall tone conveyed in the earnings announcement, thereby eliminating the potential distortion of results caused by the offsetting effects of optimistic words also present in the disclosure. This study utilized the word list from DICTION 7.0 to classify words into pessimistic and optimistic categories. DICTION 7.0 is a dictionary-based automated textual analysis program designed to quantify implicit sentiment in narratives and has been utilized in research related to tone in corporate disclosures (Davis et al. 2012 ; Tama-Sweet 2014 ; Rogers et al. 2011 ; Davis and Tama-Sweet 2012 ). It defines pessimistic words as those that fall into the following categories: blame (describing unfortunate circumstances and unplanned vicissitudes); hardship (natural disasters, adverse political outcomes, and human fears); and denial (standard negative contractions and negative function words). The dictionary of pessimistic words from DICTION 7.0 is particularly relevant in illustrating the conditions of the pandemic, which is regarded as an unprecedented phenomenon and a global disaster. Optimistic words are formulated as the sum of words that fall into the following categories: praise (expressions of affirmation regarding the positive qualities of a person, group, or entity); satisfaction (terms associated with positive emotions); and inspiration (terms related to desirable qualities). To calculate the net pessimistic tone in earnings announcement disclosures, textual narratives from the income statement section of the MD&A were extracted and analyzed using DICTION 7.0, which generates a word count for each category of words within the system. The total number of words classified under the categories ‘blame’, ‘hardship’ and ‘denial’ constitute the total of pessimistic words, while the total number of words classified under the categories ‘praise’, ‘satisfaction’ and ‘inspiration’ constitute the total optimistic ones. CEOs’ financial experience serves as a moderating variable in the relationship between firm value and pessimistic tone. Rodenbach & Brettel ( 2012 ) and Custódio & Metzger ( 2014 ) define CEOs with financial experience as individuals with career backgrounds or experience in finance, accounting or auditing. With reference to these studies, a nominal scale was employed to identify CEOs who met this definition and those who did not. Those with financial experience were assigned a value of 1, while those without a value of 0. In addition to these three variables, firm size, firm age, audit quality, sales growth, return on assets and liquidity were also included as control variables to account for firm fundamentals that may influence firm value. Firm size was defined as the natural logarithm of total assets (D’Amato and Falivena 2020 ) and firm age the time difference between the observation year and the firm's year of establishment (Coad et al., 2015 ). Both firm size and firm age are frequently associated with growth opportunities, which are critical considerations in firm valuation (Chay et al., 2015 ; Hsu & Chu, 2023 ). Higher audit quality indicates greater transparency and improved financial reporting quality. Audit quality is measured by identifying whether or not a company is audited by one of the Big Four audit firms, using a dummy variable (Saleh Aly et al., 2023 ). Furthermore, we used sales growth rate, return on assets and liquidity to control for operational performance effects on firm value. Sales growth rate was measured by the percentage of sales change per year (D’Amato & Falivena 2020 ; Dong et al. 2021); ROA assessed as the ratio of net income to total assets (Bui et al., 2023 ; Iswajuni et al., 2018 ); and liquidity evaluated as the ratio of current assets to current liabilities (Lancksweerdt et al., 2021 ; K. Li et al., 2020 ). The research model is specified as follows: $$\:\text{T}\text{O}\text{B}\text{I}\text{N}\text{Q}={{\beta\:}}_{0}+{{\beta\:}}_{1}\text{N}\text{E}\text{T}\text{T}\text{o}\text{n}\text{e}+{{\beta\:}}_{2}\text{F}\text{I}\text{N}+{{\beta\:}}_{3}\text{N}\text{E}\text{T}\text{*}\text{F}\text{I}\text{N}+{{\beta\:}}_{4}\text{F}\text{S}\text{i}\text{z}\text{e}+{{\beta\:}}_{5}\text{F}\text{A}\text{g}\text{e}+{{\beta\:}}_{6}\text{A}\text{Q}+{{\beta\:}}_{7}\text{R}\text{O}\text{A}+{{\beta\:}}_{8}\text{S}\text{A}\text{L}\text{E}\text{S}+{{\beta\:}}_{9}\text{L}\text{I}\text{Q}+{\epsilon\:}$$ Notes: TOBINQ : firm value; NETTone : net pessimistic tone in earnings announcement; FIN : CEO’s financial experience; NET*FIN : pessimistic tone in earnings announcement in a company with CEO financial experience; FSize : firm size; FAge : firm age; AQ : audit quality; ROA : profitability; SALES : sales growth; LIQ : liquidity. 2.3. Statistical Method A multiple panel regression analysis was performed using STATA. Moderated regression was used to investigate the moderating effect of the CEO's financial experience on the association between firm value and pessimistic tone in earnings announcement. The Hausman test determined that a fixed effects model would be more appropriate for this research (P = 0.000). The study also assessed heteroscedasticity, autocorrelation and multicollinearity. The mean VIF values were below 10, indicating no multicollinearity issues. However, the Breusch-Godfrey test revealed a heteroscedasticity problem (P = 0.000), and the Wooldridge test indicated an autocorrelation problem (P = 0.000). To address these issues, Driscoll-Kraay Standard Error was employed for the fixed effects model. 3. Results 3.1. Descriptive Statistics and Univariate Analysis The descriptive statistics results presented in Table 1 indicate that the overall average tone conveyed in the earnings announcements was pessimistic. One factor that may have contributed to this tendency corresponds to the negative sentiment established by the media during the pandemic (Jones et al., 2020 ). The descriptive statistics show that the sample consisted of large mature firms. However, these firms exhibited a low average ROA of 1.1%, despite having a high average sales growth of 26.8%, which suggests ineffective management of assets and costs that hindered the companies from generating profit. The poor performance of these firms is another factor that may have triggered the use of a pessimistic tone, consistent with the findings of Luo & Zhou ( 2017 ), Huang et al. ( 2014 )d Augusta & DeAngelis (2020) Table 1 Descriptive Statistics Variable Obs Mean Std. Dev. Min Max TobinQ 1380 2.036 6.113 0.085 131.407 NETTone 1380 0.014 0.013 -0.021 .08 Fin 1380 0.333 0.471 0 1 AQ 1380 0.25 0.433 0 1 Fage 1380 32.878 16.843 2 113 ROA 1380 0.011 0.383 -9.498 2.072 Fsize 1380 28.229 1.829 22.081 33.731 Sales 1380 0.268 1.129 -1 17.84 Liq 1380 4.529 20.862 .009 492.408 Univariate analysis was conducted to examine the differences in the main study variables between firms with and without financially experienced CEOs. The test results presented in Table 2 indicate that those with financial experience expressed a more pessimistic tone in earnings announcements. This finding aligns with studies by Bassyouny et al. ( 2020 ) and Davis et al. ( 2015 ), who found that the conservative nature of financially experienced CEOs prompts them to adopt a more pessimistic tone, as they prefer to consider the worst-case scenario rather than mislead shareholders with an overly optimistic tone. The results also show that firm value is lower in firms with financially experienced CEOs, which contradicts the second study hypothesis. However, there is no statistical difference in firm value between firms with and without financially experienced CEOs. Table 2 Univariate Analysis Fin = 1 Fin = 0 p-value N 459 921 TobinQ 1.8760 2.1162 0.7541 NETTone 0.0156 0.0137 0.0058 AQ 0.2484 0.2508 0.5394 Fage 32.8933 32.8708 0.4907 ROA 0.0271 0.0031 0.1369 FSize 28.2305 28.2278 0.4896 Sales 0.2684 0.2513 0.2120 Liq 5.0466 4.2709 0.2577 The results of the univariate analysis are attributed to the influence of industry-specific characteristics on the variables examined. Table 3 presents the results of the ANOVA test, which indicates a statistical difference in the study variables across industries. Meanwhile, the categorization of variables based on the presence of financially experienced CEOs does not show significant statistical differences, except for the variable measuring pessimistic tone. These findings confirm the existence of an industry effect within the research model; therefore, the study controls for industry effects in the main analysis. Table 4 illustrates the distribution of CEOs with and without financial experience across different industries. This shows that financially experienced CEOs are most concentrated in the technology industry and least in the energy industry. Moreover, the sample is dominated by the consumer non-cyclical industry. These results indicate that those presented in Tables 1 and 2 are not generalizable across all industries. Table 3 Analysis of Variance in Variables by Industry P Value By Industry TobinQ 0.0048 NETTone 0.0000 AQ 0.0000 Fage 0.0000 ROA 0.0100 FSize 0.0000 Sales 0.0049 Liq 0.0000 Table 4 CEOs with Financial Experience across Industries Industry Fin = 1 % Fin = 0 % Energy 12 19.05 51 80.95 Basic Materials 56 30.11 130 69.89 Industrials 40 33.33 80 66.67 Consumer Non-Cyclicals 102 39.08 159 60.92 Consumer Cyclicals 77 30.31 177 69.68 Healthcare 16 24.24 50 75.76 Property & Real Estate 70 37.23 118 62.77 Technology 24 40.68 35 59.32 Infrastructure 43 34.96 80 65.04 Transportation & Logistics 19 31.67 41 68.33 Table 5 presents the pairwise correlation results. These support the descriptive statistics, indicating that a CEO's financial experience is positively correlated with a pessimistic tone, while ROA exhibits the opposite correlation. The pairwise correlation results also show that pessimistic tone does not have a correlation with firm value, which does not support both hypotheses. However, it is important to note that these results were obtained without considering the control variables. Table 5 Pairwise Correlations Variable (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (1) TobinQ 1.000 (2) NETTone .021 1.000 (3) Fin − .019 .068* 1.000 (4) NETFin − .015 .542* .648* 1.000 (5) AQ − .010 − .202* − .003 − .116* 1.000 (6) FAge − .097* − .117* .001 − .057* .213* 1.000 (7) ROA − .795* − .165* .029 − .024 .083* .079* 1.000 (8) FSize − .160* − .266* .002 − .118* .475* .347* .193* 1.000 (9) Sales − .038 .001* − .021 − .015 − .062 − .085* .013 − .086 1.000 (10) Liq .015 .011 − .018 .025 − .057* − .099* .010 − .092* .029* 1.000 *** p < 0.01, ** p < 0.05, * p < 0.1 3.2. Main Results Table 6 presents the empirical results in relation to the study hypotheses. To address the concern that these may be influenced by variations in the sample data across industries, industry fixed effects regression was conducted. The regression results support the first hypothesis, which posits that a pessimistic tone in earnings announcements negatively impacts firm value. This is consistent with previous studies indicating that tone provides an insight into managers’ outlook and confidence regarding their firms’ current situation and prospects (Arslan-Ayaydin et al. 2020 ; Feldman et al. 2010 ; Henry 2008 ). In line with signalling theory, the results imply that a pessimistic tone reflected in earnings announcements serves as negative signal indicating negative underlying issues within the company (Feldman et al. 2010 ; Henry 2008 ; Loughran & Mcdonald 2011 ; Luo & Zhou 2017 ). The results of testing the interaction between a pessimistic tone in earnings announcements and CEOs’ financial experience and its effect on firm value support the second hypothesis. As shown in Table 6 , CEOs’ financial experience reduces the negative impact of a pessimistic tone in earnings announcements on firm value. Those with such experience gain trust from shareholders through their conservative approach. Conservatism is viewed as a mechanism to constrain managerial opportunism that could mislead shareholders (D’Augusta & DeAngelis, 2020 ; Lafond & Roychowdhury, 2008 ; LaFond & Watts, 2008 ). Consequently, in line with source credibility theory, the conservativeness of financially experienced CEOs, coupled with their knowledge and competence in making appropriate financial decisions for their company, is perceived as a credibility signal. This acts as a peripheral cue that is positivity associated with the message conveyed, which in turn mitigates the effect that a pessimistic tone has on firm value. The results for the control variables indicate that audit quality and liquidity are not associated with firm value, while sales growth has a positive association, in line with D’Amato and Falivena ( 2020 ), Fosu et al. ( 2016 ) and Saleh Aly et al. ( 2023 ). The results also show that larger mature firms tend to have lower valuations as their growth opportunities diminish, consistent with evidence presented by Hsu & Chu ( 2023 ). A negative coefficient was also observed for ROA, indicating that a higher ROA leads to lower firm value. This may be attributed to the increased trends in income-increasing earnings management during the Covid period (Lassoued & Khanchel, 2021 ; Lee et al., 2024 ; Yan et al., 2022 ), which have fostered scepticism among investors regarding higher profits. This finding supports the argument that conservativeness from CEOs with financial experience is highly valued by shareholders. Table 6 Multivariate test TobinQ NETTone -43.310*** (-7.29) Fin 0.849** (4.22) NET*Fin 30.958** (9.17) AQ 0.187 (1.11) Fage -0.184*** (-7.33) ROA -7.113*** (-18.71) FSize -1.794** (-5.14) Sales 0.151** (6.67) Liq 0.003 (1.42) Industry Fixed Effect Yes R 2 0.3242 Obs 1380 *** p < 0.01, ** p < 0.05, * p < 0.1 3.3. Robustness Test As a robustness check, hypothesis testing was conducted with control for year fixed effects to account for variations in the variables caused by year effects. As shown in Table 7 , the results remain consistent, indicating that a pessimistic tone leads to lower firm valuation, and that CEOs’ financial experience mitigates the association between the two variables. Additionally, tests controlling for both industry and year effects simultaneously, as well as tests excluding both effects, were performed, yielding results similar to those of the main analysis. Table 7 Regression with Industry and Year Fixed Effects TobinQ TobinQ TobinQ NETTone -43.310*** -43.490*** -43.490*** (-7.29) (-7.43) (-7.43) Fin 0.849** 0.842** 0.842** (4.22) (4.12) (4.12) NET*Fin 30.958*** 30.936*** 30.936*** (9.17) (9.29) (9.29) AQ 0.187 0.153 0.153 (1.11) (0.91) (0.91) Fage -0.184*** 1.656** 1.656** (-7.33) (5.33) (5.33) ROA -7.113*** -7.117*** -7.117*** (-18.71) (-18.75) (-18.75) FSize -1.794** -1.784** -1.784** (-5.14) (-5.09) (-5.09) Sales 0.151** 0.154** 0.154** (6.67) (6.84) (6.84) Liq 0.003 0.003 0.003 (1.42) (1.45) (1.45) Industry Fixed Effect No No Yes Year Fixed Effect No Yes Yes R 2 0.3242 0.3245 0.3245 Obs 1380 1380 1380 *** p < 0.01, ** p < 0.05, * p < 0.1 To further strengthen the argument that CEOs’ financial experience mitigates shareholders' negative perceptions of a pessimistic tone in earnings announcements, the sample was divided into two subsamples based on whether or not the CEOs had financial experience. Subsample 1 contains 459 observations representing firms with financially experienced CEOs, while subsample 2 includes 924 observations representing those without such CEOs. Table 8 presents the results of the regression analyses conducted using both subsamples. In subsample 1, a pessimistic tone in earnings announcements is not associated with firm value. In contrast, the regression results from the other subsample indicate that when the CEO lacks financial experience, a pessimistic tone negatively affects firm value. Differences in results are also observed in the relationship between ROA and firm value. In subsample 1, higher ROA is greatly valued by shareholders, whereas the results in subsample 2 indicate the opposite. These results indicate that CEOs with financial experience appear to be more trustworthy in the eyes of shareholders. As reported in Table 8 , ROA has a positive association with firm value when CEOs possess financial experience. However, when they lack such experience, ROA is negatively associated with firm value. This suggests that shareholders have greater confidence in earnings reported by CEOs with financial experience, as their conservativeness reduces the likelihood of earnings management. The trustworthiness of financially experienced CEOs becomes a key aspect that leads shareholders to overlook any pessimistic tone in earnings announcements. This implication is consistent with the second hypothesis and the results presented in Table 6 . Table 8 Subsample Analysis TobinQ (Fin = 1) TobinQ (Fin = 0) NETTone 3.350 -38.801** (1.45) (-6.39) AQ 0.370 0.531** (1.34) (3.50) FAge -0.105 -0.181** (-1.58) (-6.20) ROA 1.394** -5.998*** (4.51) (-13.49) FSize -2.375** -0.318* (-5.20) (-2.73) Liq -0.002 0.003** (-0.94) (11.24) Sales 0.140** 0.040** (6.76) (4.93) R 2 0.2206 0.4469 Obs 459 921 *** p < 0.01, ** p < 0.05, * p < 0.1 Table 9 Alternative Measurement of Pessimistic Tone TobinQ PESTone -47.843*** ( -8.00) Fin 0.861** (4.04) PES*Fin 24.736*** (11.08) AQ 0.167 (4.04) Fage -0.190*** (-8.55) ROA -7.116*** (-18.38) FSize -1.791** (-5.16) Sales 0.154*** (7.69) Liq 0.003 (1.32) _cons 59.259** (6.53) R 2 0.3244 Obs 1380 *** p < 0.01, ** p < 0.05, * p < 0.1 To provide deeper insights into how a pessimistic tone affects firm value, and to further test the robustness of the results, an alternative measure of the study's independent variable was applied. Referencing Ningsih et al. ( 2021 ), instead of using the net tone proxy, the pessimistic tone was measured by calculating the number of pessimistic words according to the DICTION 7.0 word list, divided by the total number of words in the earnings announcement. Table 9 reports the regression results using this altered proxy. They remain consistent with the study hypotheses, with the results presented in the main analysis, and with the other robustness tests. 3.4. Additional Analysis CEOs’ financial experience is part of their functional experience; previous research has argued that this influences corporate strategies and performance. Hambrick & Mason ( 1984 ), Peng & Chiu ( 2022 ), and Rodenbach & Brettel ( 2012 ) categorize such functional experience into two categories: throughput and output experience. Throughput experience refers to career experiences that tend to enhance the efficiency of existing company systems, encompassing areas such as production/operations, finance/accounting, administration and legal matters. Managers with throughput functional backgrounds are generally conservative and risk-averse. They also tend to cut budgets and pursue efficiency-oriented strategies. Conversely, output experience focuses on strategic innovation aimed at unlocking growth opportunities for the firm, which includes marketing and R&D experience. Managers with output functional backgrounds incur more innovation-related expenses (Chakravarty & Grewal, 2016 ). Studies on innovation during economic crises such as the Covid-19 pandemic indicate that varied approaches are taken by firms. Some reduce R&D expenditure, while others sustain or enhance innovation initiatives to achieve competitive advantages (Cincera et al., 2012 ; Lichtenthaler, 2021 ). Firms that maintain or enhance innovation activities during times of crisis generally experience significant benefits in the aftermath (Lichtenthaler, 2021 ). However, other research indicates that the primary motivation for firms to innovate is the necessity to reduce costs and improve operational efficiency (Montes et al., 2024 ). Therefore, it can be hypothesized that throughput functional backgrounds will be more appreciated by shareholders, especially when firms use pessimistic tones in earnings announcements. To examine shareholders' perceptions of CEOs’ functional experience, this study investigates the role of such experience in mitigating the negative effects of a pessimistic tone on firm value. CEOs with output experience were assigned a value of 1 if they possessed career experience in administration and marketing, and 0 otherwise. Those with throughput experience were given a value of 1 if they had career experience in production, finance, legal matters, or R&D, and 0 otherwise. Table 10 presents the regression results. The findings indicate that throughput experience among CEOs reduces the negative impact of a pessimistic tone on firm value, whereas output experience has the opposite effect. The Covid-19 outbreak had a significant negative economic impact. In terms of saving operating expenses and prevent bankruptcy, organizations experiencing significant sales declines and related employment cuts were unsure about the extent and length of the economic effects of the pandemic (Cui et al., 2021 ). For prospective investors and owners, a volatile market was also brought about by a sharp decline in the stock market and heightened anxiety about the future earnings prospects of companies during the pandemic. Because of the increased risk and uncertainty in the market, investors become more risk cautious and rely more on basic information during market downturns, viewing other information as speculative and noisy (Lang & Maffett, 2011 ). Therefore, when companies employ pessimistic tones in earnings announcements, they will have more faith in CEOs with throughput experience because they are more conservative. This paper also separates the categories of CEO throughput experience. Overall, only CEOs’ financial and legal experience can reduce the negative effect of pessimistic tones in earnings announcements on firm value (not tabulated). Indonesia encounters difficulties in law enforcement, characterized by a lack of legal cohesion, the diminishing authority of enforcement personnel, and insufficient legal awareness among the populace (Munawar, 2023 ). The nation's ineffective law enforcement is partially due to the low ethical standards and professionalism of law enforcers, resulting in corruption and public distrust (Koeswanto et al., 2023 ). In this context, investors find CEOs with legal experience more credible and able to protect the sustainability of companies. Table 10 Additional Analysis with Throughput and Output Experience TobinQ NETTone -36.611** ( -6.06) NET*Throu 36.584*** (26.37) NET*Out -49.109** (-3.77) AQ 0.072 (0.42) Fage -0.193*** (-9.20) ROA -7.009*** (-22.27) FSize -1.815** (-5.18) Sales 0.133** (6.94) Liq 0.004 (1.55) _cons 60.026** (6.50) R 2 0.3269 Obs 1380 *** p < 0.01, ** p < 0.05, * p < 0.1 4. Discussion The study has examined the relationship between qualitative aspects of corporate disclosures (i.e., the tone of earnings announcements) and shareholder perceptions. The findings indicate that a pessimistic tone in earnings announcements leads to lower firm value. This result contributes to understanding of the extent to which information can be extracted from the narrative tone. It is also suggested that a pessimistic tone in earnings announcements provides valuable information regarding a firm's current performance and future prospects, which can serve as a basis for shareholder assessment of it. Moreover, the study investigates the role of CEOs’ financial experience in the dynamics between pessimistic tones and firm value. The results indicate that CEOs’ financial experience mitigates the negative effects of a pessimistic tone on shareholder perceptions. During the Covid-19 pandemic, investors tended to rely on peripheral cues when processing information, rather than conducting detailed analyses of the information provided. Consistent with source-credibility theory, it was found that the perceived trustworthiness and expertise stemming from a CEO's financial experience leads shareholders to disregard any pessimistic tone presented in earnings announcement disclosures. This is because they interpret the credibility signals from the firm's CEO as positive peripheral cues associated with the information conveyed. The study findings provide extended understanding of source credibility theory during the Covid-19 pandemic, which altered shareholder behavior. The study findings have several implications. First, it has been found that a pessimistic tone in earnings announcements had a negative effect on firm value during the Covid-19 period. According to signaling theory, investors react more negatively to bad earnings news than to good news because they believe it to be especially harmful (Baier, 2022 ). This discrepancy in investor reaction is significant because it implies that the market is more susceptible to negative information, which can be made worse by economic upheavals caused by crises such as the Covid-19 pandemic (Baek et al., 2020 ). In such a case, given that investors were already on edge because of the uncertainty surrounding the pandemic's implications for the economy, the increased volatility seen during this time significantly magnified the impact of pessimistic tones (G. Liu & Sun, 2022 ). The theoretical implication of this is that future studies about Covid-19 should consider the effect of tone in disclosures on stakeholders’ perceptions. The practical implication is that managers should have paid attention to the tone of their earnings announcements during the Covid-19 period as investors have a negative perception of pessimistic tones used. In relation to regulation, regulators could impose more stringent regulations on the presentation of financial information in annual reports, ensuring that the narrative tone represents the company's financial condition appropriately. This could inhibit the distortion in earnings announcements which convey an excessively optimistic or pessimistic perspective, thus safeguarding investors from possible disinformation. Second, the research extends source credibility theory by introducing CEOs’ financial experience as a moderating factor in the relationship between communication tone and firm value, offering a new perspective on investor behavior. In order to make well-informed judgments, investors frequently depend on the tone and content of corporate communications. However, as COVID-19 obscured the credibility of information, investors needed refined sources to strengthen the credibility of earnings information (D’Augusta & Grossetti, 2023 ). CEOs with financial experience can improve the perceived dependability of messages, which in turn can affect investor behavior. For example, research has demonstrated that investor reactions can be influenced by the tone employed during earnings conference calls, and that credibility is a key factor in this dynamic (Fu et al., 2021 ). The theoretical implication of this is that future studies with the pandemic as a background can use source credibility theory to underscore the value of having a credible leader. The practical implication is that corporations should appoint suitable leaders to ensure that, even in the worst conditions such as Covid-19, shareholders maintain their confidence in the organization. With regard to regulations, regulators could contemplate amending corporate governance rules to highlight the significance of financial expertise in senior positions. Requiring or advising that CEOs have such expertise could become a normative practice, guaranteeing that companies are directed by leaders capable of effectively navigating financial complexities. This action could result in enhanced transparency and accuracy in financial reporting and consequently increase investors’ confidence in companies (Chang et al., 2024 ). Regulatory bodies could also sponsor training and certification programs aimed at enhancing financial management and reporting skills among top executives to encourage financial literacy. By incentivizing or mandating CEOs to acquire such certificates, companies can guarantee that their leadership is adequately equipped to manage financial disclosures responsibly, thus preserving investor trust even when delivering unfavorable information. Third, the study has found that the legal and financial experience of CEOs can mitigate the negative effect of pessimistic tones in earnings announcements on firm value. The results indicate that the role of CEOs’ functional experience depends on the institutional context. The theoretical implication of this is that research on the intricate relationship between disclosure tone, investors and CEOs’ ability should refer to contingency theory and analyze companies in different institutional contexts. Future research should analyze the impact of executive backgrounds on corporate communication strategies. The practical implication is that regulatory organizations should promote corporate governance frameworks that emphasize a combination of legal and financial expertise among executive teams. This diversity could improve the quality of financial reports and strengthen investor relations. Regulators should cultivate an environment that enhances investor confidence in corporate communications, such as increasing legal enforcement and reducing corruption (Rudyanto et al., 2022 ). 5. Conclusion This study has investigated the relationship between the tone of earnings announcements and firm value, particularly focusing on the moderating role of CEOs' financial experience during the COVID-19 pandemic. The findings reveal that a pessimistic tone in earnings announcements negatively affects firm value. This result underscores the significant influence of qualitative aspects of corporate disclosures, suggesting that the tone used in earnings announcements conveys crucial information about a firm's current and future performance. Furthermore, the study demonstrates that CEOs’ financial experience mitigates the adverse effects of a pessimistic tone on firm value. Investors, particularly during periods of heightened uncertainty, rely on credibility signals from leadership when interpreting financial disclosures. The results align with source credibility theory, indicating that shareholders perceive financially experienced CEOs as more trustworthy and competent, thereby reducing the negative impact of pessimistic earnings announcements on firm value. These findings contribute to the literature in several ways. First, they emphasize the importance of tone in financial communication, particularly during economic crises. Second, they extend source credibility theory by highlighting how CEO characteristics influence investor perceptions. Finally, the study offers practical implications for firms, suggesting that companies should carefully manage the tone of their disclosures and consider the financial expertise of their top executives as a means to sustain investor confidence. The study has several limitations. First, there were challenges in identifying CEOs' financial experience because not all companies disclose their backgrounds comprehensively in their annual reports. As an alternative, information on CEOs was sought from LinkedIn, Wikipedia, social media, and relevant news outlets. However, this method does not guarantee that all CEOs with financial experience were identified. Future researchers could utilize professional databases such as Bloomberg that specifically document the backgrounds and experience of CEOs, or employ interview techniques to obtain more accurate and comprehensive information. Second, due to the limitations of the DICTION 7.0 application, which can only analyze English words, meaning a lack of a pessimistic word list in Indonesian, the study exclusively focused on earnings announcement narrative disclosures that were in English. To capture a more accurate association between tone and investor perceptions, future researchers should obtain a relevant word list or use word analysis tools that can accommodate multiple languages. This study reinforces the idea that beyond financial figures, corporate communication strategies and leadership characteristics play a crucial role in shaping investor sentiment and firm valuation, particularly in times of crisis. Declarations Ethics approval and consent to participate Not applicable Consent for publication Not applicable Funding Not applicable Author Contribution A.R. did conceptualization, methodology, software, validation, formal analysis, investigation, data curation, writing-review and editing, supervision, project administration while S.A.P. found resources, did data curation, wrote original draft preparation, did visualization. All authors reviewed the manuscript.Acknowledgement:We would like to thank Trisakti School of Management for supporting this research.Funding:Not applicable Acknowledgement We would like to thank Trisakti School of Management for supporting this research.- FundingNot applicable- Competing InterestThe authors declare that they have no competing interests- Data AvailabilityAll data generated or analysed during this study are included in this published article Data Availability Data is provided within the manuscript References Ahmadi, A., & Bouri, A. (2018). The accounting value relevance of earnings and book value: Tunisian banks and financial institutions. International Journal of Law and Management , 60 (2), 342–354. https://doi.org/10.1108/IJLMA-11-2016-0131 Anastasiou, D., Ballis, A., & Drakos, K. (2022). Constructing a positive sentiment index for COVID-19: Evidence from G20 stock markets. 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Limited investor attention and biased reactions to information: Evidence from the COVID-19 pandemic. Journal of Financial Markets , 62 , 100757. https://doi.org/10.1016/j.finmar.2022.100757 Yan, H., Liu, Z., Wang, H., Zhang, X., & Zheng, X. (2022). How does the COVID-19 affect earnings management: Empirical evidence from China. Research in International Business and Finance , 63 , 101772. https://doi.org/10.1016/j.ribaf.2022.101772 Ying, Q., & He, S. (2020). Is the CEOs’ financial and accounting education experience valuable? Evidence from the perspective of M&A performance. China Journal of Accounting Studies , 8 (1), 35–65. https://doi.org/10.1080/21697213.2020.1822023 Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. 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Introduction","content":"\u003cp\u003eNumerous studies have demonstrated the role of earnings figures in explaining companies\u0026rsquo; current and future performance (Duarte et al., \u003cspan citationid=\"CR34\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Pimentel \u0026amp; Malacrida, \u003cspan citationid=\"CR82\" class=\"CitationRef\"\u003e2020\u003c/span\u003e); future cash flows (Sinnewe et al., \u003cspan citationid=\"CR92\" class=\"CitationRef\"\u003e2017\u003c/span\u003e; Supriyadi, \u003cspan citationid=\"CR94\" class=\"CitationRef\"\u003e2018\u003c/span\u003e); investment decisions (Sumiyana et al., \u003cspan citationid=\"CR93\" class=\"CitationRef\"\u003e2023\u003c/span\u003e); and firm value (Ahmadi \u0026amp; Bouri, \u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Sutopo et al., \u003cspan citationid=\"CR96\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). However, a growing body of research has begun to show interest in the tone of earnings announcements, which is more informative in comparison to \u0026lsquo;hard\u0026rsquo; information such as earnings figures (Baginski et al., \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Davis et al., \u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e2012\u003c/span\u003ea; Demers \u0026amp; Vega, \u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e2010\u003c/span\u003e). This phenomenon is attributable to the environment of uncertainty that diminished the value relevance of traditional accounting figures, a situation which was more prevalent during the Covid-19 pandemic (D\u0026rsquo;Augusta \u0026amp; Grossetti, \u003cspan citationid=\"CR26\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Fabrizi et al., \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Liu \u0026amp; Sun, \u003cspan citationid=\"CR68\" class=\"CitationRef\"\u003e2022\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eFinancial crises expose firms\u0026rsquo; reporting behavior to intense public scrutiny (Jones et al., \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e2020\u003c/span\u003e), prompting them to consider the impression formed by others (Leary \u0026amp; Kowalski, \u003cspan citationid=\"CR63\" class=\"CitationRef\"\u003e1990\u003c/span\u003e), particularly shareholders. One aspect of corporate reporting that shapes shareholders\u0026rsquo; impressions is tone (Huang et al. \u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Price et al. \u003cspan citationid=\"CR84\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Dong et al. 2021). The pandemic encouraged companies to adopt a more pessimistic tone in their earnings announcements to enhance transparency regarding its negative effects on performance (D\u0026rsquo;Augusta and DeAngelis \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Ningsih et al. \u003cspan citationid=\"CR78\" class=\"CitationRef\"\u003e2021\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eDespite being designed to alleviate negative reactions from shareholders, employing a pessimistic tone in earnings announcements can still adversely affect their perceptions, as suggested by Druz et al. (\u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2015\u003c/span\u003e) and Huang et al. (\u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e2014\u003c/span\u003e). The tone employed is not merely an interpretation of the reported financial data, but also reflects management\u0026rsquo;s viewpoint, outlook and confidence concerning the company's circumstances, leading to a reassessment of its future prospects (Davis \u0026amp; Tama-Sweet \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Jiang et al. \u003cspan citationid=\"CR54\" class=\"CitationRef\"\u003e2019\u003c/span\u003e; Dong et al. 2021). The negative reaction is compounded by shareholders\u0026rsquo; tendency to react more strongly to negative information than to positive (Tetlock et al. \u003cspan citationid=\"CR99\" class=\"CitationRef\"\u003e2008\u003c/span\u003e; Xu et al. \u003cspan citationid=\"CR106\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). This issue is particularly pertinent in scenarios where shareholders are already on high alert due to economic uncertainties arising from the pandemic (Engelhardt et al. \u003cspan citationid=\"CR36\" class=\"CitationRef\"\u003e2020\u003c/span\u003e). As tone reflects management\u0026rsquo;s viewpoint, the negative effect of a pessimistic tone in earnings announcements on shareholders\u0026rsquo; perception should be mitigated by management\u0026rsquo;s characteristics. This study employs CEOs\u0026rsquo; financial experience as a characteristic that can reduce this negative relationship.\u003c/p\u003e \u003cp\u003eThe study aims to provide empirical evidence regarding the effect of pessimistic tones in earnings announcements on firm value, exploring the role of CEOs\u0026rsquo; financial experience as a moderating variable during the Covid-19 pandemic. The research questions were as follows: (1) What is the effect of pessimistic tones in earnings announcements on firm value? and (2) What is the effect of pessimistic tones in earnings announcements on firm value if the CEO has financial experience?\u003c/p\u003e \u003cp\u003eThe study contributes to the literature in two ways. First, it examines the relationship between pessimistic tones in earnings announcements and firm value in the context of the Covid-19 pandemic, which distinguishes it from previous studies that did not specifically focus on this unique economic environment. The relationship between tone and firm value is a well-established topic in academic literature (Davis et al., \u003cspan citationid=\"CR27\" class=\"CitationRef\"\u003e2015\u003c/span\u003e; Luo \u0026amp; Zhou, \u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2017\u003c/span\u003e; Ningsih et al., \u003cspan citationid=\"CR78\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). However, examination of this relationship in the context of the Covid-19 pandemic remains relatively unexplored. Covid-19 provides a natural experimental setting, in which investors are more uncertain of the credibility of earnings information (Fabrizi et al., \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). Therefore, a pessimistic tone in earnings announcement would have had a more severe effect on firm value during the pandemic period.\u003c/p\u003e \u003cp\u003eSecond, the study fills the research gap by exploring how the pandemic-driven change in communication strategy, combined with the moderating role of CEOs\u0026rsquo; financial experience, together influenced shareholder perceptions and firm value. Previous research has investigated various leadership characteristics such as age, gender, personality, ability, experience and power as determinants of tone in corporate disclosures (Bassyouny et al. \u003cspan citationid=\"CR11\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Buchholz et al. \u003cspan citationid=\"CR14\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Liu and Nguyen, \u003cspan citationid=\"CR69\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Luo and Zhou \u003cspan citationid=\"CR72\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Arslan-Ayaydin et al. (\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e2016\u003c/span\u003e), Davis et al. (\u003cspan citationid=\"CR27\" class=\"CitationRef\"\u003e2015\u003c/span\u003e), Luo \u0026amp; Zhou (\u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2017\u003c/span\u003e) and Marquez-Illescas et al. (\u003cspan citationid=\"CR73\" class=\"CitationRef\"\u003e2019\u003c/span\u003e) extend the literature by exploring how these determinants influence shareholder perceptions of tone. However, none of the previous studies explains the moderating role of CEO characteristics on the effect of tone management on firm value. With reference to Hennig et al. (\u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2023\u003c/span\u003e), this study examines managerial characteristics as moderators of the association between pessimistic tone and firm value, rather than as tone drivers using source credibility.\u003c/p\u003e \u003cp\u003eThe difference between this study and that of Hennig et al. is that ours utilizes CEO experience, specifically financial experience, as a signal of credibility, rather than CEOs\u0026rsquo; psychological traits. According to source credibility theory, credibility signals from a sender can lead to varied interpretations of identical messages (Hennig et al., \u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). This approach is justified because during the pandemic shareholders tended to rely on peripheral processing, which prevented them from conducting detailed analysis of a CEO's personality (Wong et al., \u003cspan citationid=\"CR103\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Instead, they captured cues in relation to expertise and trustworthiness from simple information, such as the CEO's financial experience. This is particularly relevant, as financially experienced CEOs addressed concerns regarding unreliable disclosures and poor financial conditions during the pandemic.\u003c/p\u003e \u003cdiv id=\"Sec2\" class=\"Section2\"\u003e \u003ch2\u003e1.1. Source Credibility and Investors\u0026rsquo; Altered Behavior\u003c/h2\u003e \u003cp\u003eSource credibility theory posits that individual interpretation of a message is a function of two key factors: source trustworthiness, which encompasses perceived honesty and reliability, and source expertise, defined as the level of competence and understanding regarding the subject matter (Hovland et al., \u003cspan citationid=\"CR47\" class=\"CitationRef\"\u003e1953\u003c/span\u003e; Hovland \u0026amp; Weiss, \u003cspan citationid=\"CR48\" class=\"CitationRef\"\u003e1951\u003c/span\u003e). Extended research on Hovland et al.\u0026rsquo;s theory yielded parallel results, indicating that higher source credibility enhances recipients' trust in and agreement with the content of the information presented (Birnbaum \u0026amp;Mellers \u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e1983\u003c/span\u003e; Giffin \u003cspan citationid=\"CR41\" class=\"CitationRef\"\u003e1967\u003c/span\u003e; Hennig et al. \u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Pornpitakpan \u003cspan citationid=\"CR83\" class=\"CitationRef\"\u003e2004\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe Covid-19 pandemic radically changed how the world functions, particularly influencing how investors process information. According to the Elaboration Likelihood Model (ELM), individuals process information through two distinct routes: central processing and peripheral processing (Petty \u0026amp; Cacioppo, \u003cspan citationid=\"CR81\" class=\"CitationRef\"\u003e1986\u003c/span\u003e). Central processing entails a meticulous and thoughtful evaluation of the information presented, typically requiring cognitive engagement. Conversely, peripheral processing relies on superficial cues or heuristics that signal the desirability of the advocated position (Susmann et al., \u003cspan citationid=\"CR95\" class=\"CitationRef\"\u003e2022\u003c/span\u003e). Investors\u0026rsquo; cognitive engagement in analyzing detailed financial reports, market trends or economic forecasts decreased during the pandemic. Instead, they based their decisions on familiarity, news sentiment and herding behavior (Bouri et al. \u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; Engelhardt et al. \u003cspan citationid=\"CR36\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Mohanty et al. \u003cspan citationid=\"CR74\" class=\"CitationRef\"\u003e2024\u003c/span\u003e), which demonstrates a tendency toward peripheral processing. Consequently, during the pandemic, investors may have perceived source credibility not as an argument that enhances the reliability of information, but rather as a peripheral cue associating positivity with the message.\u003c/p\u003e \u003cp\u003eEmploying source credibility theory through the lens of peripheral processing, this study investigates the role of CEOs\u0026rsquo; financial experience as a message sender in mitigating shareholders' negative reactions to pessimistic tones in earnings announcements. In times of desperate need for reliable disclosure and financial improvement, their conservative nature, along with the knowledge and capabilities gained by CEOs from their financial experience, can be perceived as cues of trustworthiness and expertise, signalling credibility to shareholders. This signal of credibility will further augment the positive aspects in firm valuation.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec3\" class=\"Section2\"\u003e \u003ch2\u003e1.2. Hypothesis Development\u003c/h2\u003e \u003cp\u003eThe tone used in narrative corporate disclosures arguably provides more valuable information than quantitative disclosures (Baginski et al. \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Davis et al. \u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Demers and Vega \u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e2010\u003c/span\u003e), ]as it not only explains firms\u0026rsquo; current performance (Hadro et al., \u003cspan citationid=\"CR42\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; F. Li, \u003cspan citationid=\"CR65\" class=\"CitationRef\"\u003e2010\u003c/span\u003e), but also, based on signalling theory, addresses the information asymmetry gap by signalling managers' outlook and confidence about the company's future to shareholders (Arslan-Ayaydin et al. \u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Feldman et al. \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2010\u003c/span\u003e; Henry \u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e2008\u003c/span\u003e). Consequently, a pessimistic tone in earnings announcements is often perceived unfavorably by shareholders (Feldman et al. \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2010\u003c/span\u003e; Henry \u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e2008\u003c/span\u003e; Loughran and Mcdonald \u003cspan citationid=\"CR70\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Luo and Zhou \u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2017\u003c/span\u003e), as it is associated with underlying risks and issues within the company (Fu et al. \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; Ningsih et al. \u003cspan citationid=\"CR78\" class=\"CitationRef\"\u003e2021\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eNumerous studies have demonstrated the significance of the tone of corporate disclosure in explaining market reactions (Feldman et al. \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2010\u003c/span\u003e; Henry \u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e2008\u003c/span\u003e; Loughran \u0026amp; Mcdonald \u003cspan citationid=\"CR70\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Luo \u0026amp; Zhou \u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2017\u003c/span\u003e; Huang et al. \u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Price et al. \u003cspan citationid=\"CR84\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Dong et al. 2021). However, research conducted Elrod (\u003cspan citationid=\"CR35\" class=\"CitationRef\"\u003e2009\u003c/span\u003e) and Tailab \u0026amp; Burak (\u003cspan citationid=\"CR97\" class=\"CitationRef\"\u003e2021\u003c/span\u003e) presented contradictory results. Elrod (\u003cspan citationid=\"CR35\" class=\"CitationRef\"\u003e2009\u003c/span\u003e) argues that unresponsive markets occur because managers do not utilize linguistic tone effectively to communicate with investors, while from the investors' perspective Tailab \u0026amp; Burak (\u003cspan citationid=\"CR97\" class=\"CitationRef\"\u003e2021\u003c/span\u003e) contend that they still consider quantitative aspects in corporate disclosures when making judgments. However, these studies were conducted under normal circumstances, whereas the pandemic created an environment of unprecedented uncertainty and led to a decline in the value relevance of earnings figures (D\u0026rsquo;Augusta \u0026amp; Grossetti, \u003cspan citationid=\"CR26\" class=\"CitationRef\"\u003e2023\u003c/span\u003ea; Fabrizi et al., \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; G. Liu \u0026amp; Sun, \u003cspan citationid=\"CR68\" class=\"CitationRef\"\u003e2022\u003c/span\u003e). As quantitative data is not able to adequately convey the complexity of firms\u0026rsquo; situation, shareholders have turned to tone as a means of obtaining private information possessed by company insiders (Dong et al. 2021).\u003c/p\u003e \u003cp\u003eThe pandemic not only drove the trend towards the use of pessimistic tones in earnings announcements, but also influenced how shareholders perceive such tones. During the pandemic, market participants' reactions and performance were heavily driven by sentiment, with negative sentiment resulting in adverse reactions (Anastasiou et al., \u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2022\u003c/span\u003e; Bai et al., \u003cspan citationid=\"CR8\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Xia et al., \u003cspan citationid=\"CR104\" class=\"CitationRef\"\u003e2024\u003c/span\u003e). Negative media coverage regarding Covid-19 further contributed to this relationship. Tsileponis et al. (\u003cspan citationid=\"CR102\" class=\"CitationRef\"\u003e2020\u003c/span\u003e) note that the impact of linguistic tone in corporate disclosures on market reactions is moderated by the tone of media articles. This implies that during the pandemic, the role of pessimistic tones in explaining shareholder reactions became more significant. The correlation between these two variables is compounded by shareholders' tendency to respond more strongly to negative than to positive information (Tetlock et al. \u003cspan citationid=\"CR99\" class=\"CitationRef\"\u003e2008\u003c/span\u003e; Xu et al. \u003cspan citationid=\"CR106\" class=\"CitationRef\"\u003e2023\u003c/span\u003e), particularly during the periods of increased anxiety regarding the economic impacts of the pandemic (Engelhardt et al. \u003cspan citationid=\"CR36\" class=\"CitationRef\"\u003e2020\u003c/span\u003e).\u003c/p\u003e \u003cp\u003e \u003cb\u003eH1: Pessimistic tones in earnings announcements had a negative effect on firm value in the Covid-19 era.\u003c/b\u003e \u003c/p\u003e \u003cp\u003ePrevious research indicates that the meaningful characteristics (e.g., managerial experience, power, high education, CEO tenure) of firms\u0026rsquo; top management serve as a value-added asset from the perspective of shareholders (Atawnah et al. 2024; Kim and Yoon 2023; Koo 2015; Rakhmayil \u0026amp; Yuce 2011). Recent studies have extended related research to explore how the characteristics of firms\u0026rsquo; leaders influence the correlation between tone and the perceptions of shareholders. Studies conducted by Luo and Zhou (\u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2017\u003c/span\u003e), Davis et al. (\u003cspan citationid=\"CR27\" class=\"CitationRef\"\u003e2015\u003c/span\u003e), Marquez-Illescas et al. (\u003cspan citationid=\"CR73\" class=\"CitationRef\"\u003e2019\u003c/span\u003e), and Arslan-Ayaydin et al. (\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e2016\u003c/span\u003e) argue and demonstrate that managerial characteristics are a significant factor considered by investors when evaluating firms\u0026rsquo; stock value through the tone employed in earnings announcements.\u003c/p\u003e \u003cp\u003eAnother study conducted by Hennig et al. (\u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2023\u003c/span\u003e) approached the topic from a slightly different perspective. They applied the source credibility theory formulated by Hovland et al. to further explore the dynamic in investors\u0026rsquo; reaction to tone in conference calls. According to Hovland \u0026amp; Weiss (\u003cspan citationid=\"CR48\" class=\"CitationRef\"\u003e1951\u003c/span\u003e), an identical message can be interpreted differently depending on the credibility signals emitted by the sender. Hennig et al. (\u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2023\u003c/span\u003e) found that the credibility of firms\u0026rsquo; CEOs as message senders moderates the positive relationship between tone and market reactions. This finding suggests that source credibility serves as an argument that validates shareholders' assessments of the conveyed tone. However, the pandemic altered the manner in which investors utilize available information in their decision-making processes, leading them to perceive source credibility as a peripheral cue that adds a positive aspect to their considerations.\u003c/p\u003e \u003cp\u003eThe financial experience of CEOs has garnered attention from shareholders, especially in light of the pandemic, which underscored the importance of reliable disclosure and effective financial management. Under such circumstances, CEOs\u0026rsquo; financial experience might serve as peripheral cue of credibility (trustworthiness and expertise) that influences shareholders\u0026rsquo; decisions. Financial experience fosters a conservative nature that reduces involvement in earnings management practices, thereby enhancing perceived trustworthiness. Furthermore, this experience equipped CEOs with the knowledge and skills essential for managing financial conditions and assisting their company in navigating the challenges posed by the pandemic, which can be perceived as an aspect of expertise. Ultimately, these credibility aspects from financially experienced CEOs shape positive perceptions among shareholders in their evaluations of firms.\u003c/p\u003e \u003cp\u003e \u003cb\u003eH2: CEOs\u0026rsquo; financial experience reduced the negative effect of pessimistic tones in earnings announcements in the Covid-19 era.\u003c/b\u003e \u003c/p\u003e \u003c/div\u003e"},{"header":"2. Materials and Method","content":"\u003cdiv id=\"Sec5\" class=\"Section2\"\u003e \u003ch2\u003e2.1. Sample and Setting\u003c/h2\u003e \u003cp\u003eThe study analyses secondary data from all non-financial companies that were consistently listed on the Indonesian Stock Exchange from 2020 to 2023. Compared to developed countries, developing ones were more severely impacted negatively by the Covid-19 pandemic (Muzindutsi et al., \u003cspan citationid=\"CR77\" class=\"CitationRef\"\u003e2022\u003c/span\u003e). Previous research has also found that the pandemic only affected stock returns and volatility in emerging markets (Harjoto et al., \u003cspan citationid=\"CR44\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). The study focus on Indonesia is relevant, as it wasone of the emerging countries most vulnerable to the impacts of new waves of the Covid-19 virus, which posed a significant threat during the research period. The Indonesian government ranked fourth worst in managing the pandemic globally, which was attributed to unclear and inconsistent information and decision-making processes (Ayuningtyas et al., \u003cspan citationid=\"CR5\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Consequently, the public tended to be confused about which information to follow, leading them to disregard available guidance (Roziqin et al., \u003cspan citationid=\"CR88\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). The Covid-19 Task Force reported that 20 out of 34 provinces in Indonesia had compliance with Covid-19 regulation rates below the 85% standard set by the government (Office of Assistant to Deputy Cabinet Secretary for State Documents \u0026amp; Translation \u003cspan citationid=\"CR101\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Additionally, there was a significant drop-off in booster shot uptake in the country (WHO 2021). These factors have rendered the Indonesian economy subject to the uncertainties of the Covid-19 pandemic(UNICEF, 2022). This economic uncertainty has altered CEOs' confidence regarding future earnings, prompting a more pessimistic tone in their earnings announcements. In addition, previous research has found that the negative effect of Covid-19 on firm value wasstronger in countries with less robust institutional systems, such as Indonesia (Hu \u0026amp; Zhang \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; Yan et al. \u003cspan citationid=\"CR107\" class=\"CitationRef\"\u003e2022\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe study first focused on 662 non-financial firms listed on the Indonesian Stock Exchange from 2020 to 2023 and ultimately retained a final sample of 461, with three outlier observations, resulting in 1,380 firm-year observations. The sample was streamlined by eliminating firms that did not have fiscal year-ends on December 31 (seven firms); those with incomplete financial statements (35) or annual reports (41 firms) throughout the observation period; and firms that reported in currencies other than the rupiah (88). Furthermore, 19 firms with inactive trading activities were identified and thus excluded. Finally, because the research required data on CEO experience and textual explanations in the earnings announcement section of the Management's Discussion \u0026amp; Analysis (MD\u0026amp;A), 11 firms that did not provide such information were also excluded.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec6\" class=\"Section2\"\u003e \u003ch2\u003e2.2. Measures\u003c/h2\u003e \u003cp\u003eThe study variables of interest were pessimistic tone, CEOs\u0026rsquo; financial experience, and firm value. Referencing previous research, our study measured firm value using a Tobin\u0026rsquo;s Q proxy, calculated as the sum of market value of common equity and book value of liabilities divided by total assets (D\u0026rsquo;Amato and Falivena \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Silva et al. \u003cspan citationid=\"CR91\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Tobin's Q encapsulates the market's expectations of a company's growth opportunities (Bui et al., \u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Silva et al., \u003cspan citationid=\"CR91\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Its inherent advantages allow for a more accurate reflection of shareholder perceptions, as shareholders consider not only a company's historical performance, but also its future prospects (Desai et al., \u003cspan citationid=\"CR32\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Iturriaga \u0026amp; Cris\u0026oacute;stomo, \u003cspan citationid=\"CR53\" class=\"CitationRef\"\u003e2010\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eTo test the hypothesis regarding the relationship between firm value and pessimistic tone, pessimistic tone in earnings announcements was measured using a proxy defined as the difference between pessimistic and optimistic words, divided by the total number of words in the earnings announcement (Hennig et al. \u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Huang et al. \u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Luo\u0026amp; Zhou \u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2017\u003c/span\u003e). This measurement captured the overall tone conveyed in the earnings announcement, thereby eliminating the potential distortion of results caused by the offsetting effects of optimistic words also present in the disclosure.\u003c/p\u003e \u003cp\u003eThis study utilized the word list from DICTION 7.0 to classify words into pessimistic and optimistic categories. DICTION 7.0 is a dictionary-based automated textual analysis program designed to quantify implicit sentiment in narratives and has been utilized in research related to tone in corporate disclosures (Davis et al. \u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Tama-Sweet \u003cspan citationid=\"CR98\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Rogers et al. \u003cspan citationid=\"CR87\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Davis and Tama-Sweet \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2012\u003c/span\u003e). It defines pessimistic words as those that fall into the following categories: blame (describing unfortunate circumstances and unplanned vicissitudes); hardship (natural disasters, adverse political outcomes, and human fears); and denial (standard negative contractions and negative function words). The dictionary of pessimistic words from DICTION 7.0 is particularly relevant in illustrating the conditions of the pandemic, which is regarded as an unprecedented phenomenon and a global disaster. Optimistic words are formulated as the sum of words that fall into the following categories: praise (expressions of affirmation regarding the positive qualities of a person, group, or entity); satisfaction (terms associated with positive emotions); and inspiration (terms related to desirable qualities).\u003c/p\u003e \u003cp\u003eTo calculate the net pessimistic tone in earnings announcement disclosures, textual narratives from the income statement section of the MD\u0026amp;A were extracted and analyzed using DICTION 7.0, which generates a word count for each category of words within the system. The total number of words classified under the categories \u0026lsquo;blame\u0026rsquo;, \u0026lsquo;hardship\u0026rsquo; and \u0026lsquo;denial\u0026rsquo; constitute the total of pessimistic words, while the total number of words classified under the categories \u0026lsquo;praise\u0026rsquo;, \u0026lsquo;satisfaction\u0026rsquo; and \u0026lsquo;inspiration\u0026rsquo; constitute the total optimistic ones.\u003c/p\u003e \u003cp\u003eCEOs\u0026rsquo; financial experience serves as a moderating variable in the relationship between firm value and pessimistic tone. Rodenbach \u0026amp; Brettel (\u003cspan citationid=\"CR86\" class=\"CitationRef\"\u003e2012\u003c/span\u003e) and Cust\u0026oacute;dio \u0026amp; Metzger (\u003cspan citationid=\"CR23\" class=\"CitationRef\"\u003e2014\u003c/span\u003e) define CEOs with financial experience as individuals with career backgrounds or experience in finance, accounting or auditing. With reference to these studies, a nominal scale was employed to identify CEOs who met this definition and those who did not. Those with financial experience were assigned a value of 1, while those without a value of 0.\u003c/p\u003e \u003cp\u003eIn addition to these three variables, firm size, firm age, audit quality, sales growth, return on assets and liquidity were also included as control variables to account for firm fundamentals that may influence firm value. Firm size was defined as the natural logarithm of total assets (D\u0026rsquo;Amato and Falivena \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2020\u003c/span\u003e) and firm age the time difference between the observation year and the firm's year of establishment (Coad et al., \u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e2015\u003c/span\u003e). Both firm size and firm age are frequently associated with growth opportunities, which are critical considerations in firm valuation (Chay et al., \u003cspan citationid=\"CR18\" class=\"CitationRef\"\u003e2015\u003c/span\u003e; Hsu \u0026amp; Chu, \u003cspan citationid=\"CR49\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). Higher audit quality indicates greater transparency and improved financial reporting quality. Audit quality is measured by identifying whether or not a company is audited by one of the Big Four audit firms, using a dummy variable (Saleh Aly et al., \u003cspan citationid=\"CR90\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). Furthermore, we used sales growth rate, return on assets and liquidity to control for operational performance effects on firm value. Sales growth rate was measured by the percentage of sales change per year (D\u0026rsquo;Amato \u0026amp; Falivena \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Dong et al. 2021); ROA assessed as the ratio of net income to total assets (Bui et al., \u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Iswajuni et al., \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e2018\u003c/span\u003e); and liquidity evaluated as the ratio of current assets to current liabilities (Lancksweerdt et al., \u003cspan citationid=\"CR60\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; K. Li et al., \u003cspan citationid=\"CR66\" class=\"CitationRef\"\u003e2020\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe research model is specified as follows:\u003cdiv id=\"Equa\" class=\"Equation\"\u003e\u003cdiv format=\"TEX\" class=\"mathdisplay\" id=\"FileID_Equa\" name=\"EquationSource\"\u003e\n$$\\:\\text{T}\\text{O}\\text{B}\\text{I}\\text{N}\\text{Q}={{\\beta\\:}}_{0}+{{\\beta\\:}}_{1}\\text{N}\\text{E}\\text{T}\\text{T}\\text{o}\\text{n}\\text{e}+{{\\beta\\:}}_{2}\\text{F}\\text{I}\\text{N}+{{\\beta\\:}}_{3}\\text{N}\\text{E}\\text{T}\\text{*}\\text{F}\\text{I}\\text{N}+{{\\beta\\:}}_{4}\\text{F}\\text{S}\\text{i}\\text{z}\\text{e}+{{\\beta\\:}}_{5}\\text{F}\\text{A}\\text{g}\\text{e}+{{\\beta\\:}}_{6}\\text{A}\\text{Q}+{{\\beta\\:}}_{7}\\text{R}\\text{O}\\text{A}+{{\\beta\\:}}_{8}\\text{S}\\text{A}\\text{L}\\text{E}\\text{S}+{{\\beta\\:}}_{9}\\text{L}\\text{I}\\text{Q}+{\\epsilon\\:}$$\u003c/div\u003e\u003c/div\u003e\u003c/p\u003e \u003cp\u003eNotes: \u003cb\u003eTOBINQ\u003c/b\u003e: firm value; \u003cb\u003eNETTone\u003c/b\u003e: net pessimistic tone in earnings announcement; \u003cb\u003eFIN\u003c/b\u003e: CEO\u0026rsquo;s financial experience; \u003cb\u003eNET*FIN\u003c/b\u003e: pessimistic tone in earnings announcement in a company with CEO financial experience; \u003cb\u003eFSize\u003c/b\u003e: firm size; \u003cb\u003eFAge\u003c/b\u003e: firm age; \u003cb\u003eAQ\u003c/b\u003e: audit quality; \u003cb\u003eROA\u003c/b\u003e: profitability; \u003cb\u003eSALES\u003c/b\u003e: sales growth; \u003cb\u003eLIQ\u003c/b\u003e: liquidity.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec7\" class=\"Section2\"\u003e \u003ch2\u003e2.3. Statistical Method\u003c/h2\u003e \u003cp\u003eA multiple panel regression analysis was performed using STATA. Moderated regression was used to investigate the moderating effect of the CEO's financial experience on the association between firm value and pessimistic tone in earnings announcement. The Hausman test determined that a fixed effects model would be more appropriate for this research (P\u0026thinsp;=\u0026thinsp;0.000). The study also assessed heteroscedasticity, autocorrelation and multicollinearity. The mean VIF values were below 10, indicating no multicollinearity issues. However, the Breusch-Godfrey test revealed a heteroscedasticity problem (P\u0026thinsp;=\u0026thinsp;0.000), and the Wooldridge test indicated an autocorrelation problem (P\u0026thinsp;=\u0026thinsp;0.000). To address these issues, Driscoll-Kraay Standard Error was employed for the fixed effects model.\u003c/p\u003e \u003c/div\u003e"},{"header":"3. Results","content":"\u003cdiv id=\"Sec9\" class=\"Section2\"\u003e \u003ch2\u003e3.1. Descriptive Statistics and Univariate Analysis\u003c/h2\u003e \u003cp\u003eThe descriptive statistics results presented in Table\u0026nbsp;\u003cspan refid=\"Tab1\" class=\"InternalRef\"\u003e1\u003c/span\u003e indicate that the overall average tone conveyed in the earnings announcements was pessimistic. One factor that may have contributed to this tendency corresponds to the negative sentiment established by the media during the pandemic (Jones et al., \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e2020\u003c/span\u003e). The descriptive statistics show that the sample consisted of large mature firms. However, these firms exhibited a low average ROA of 1.1%, despite having a high average sales growth of 26.8%, which suggests ineffective management of assets and costs that hindered the companies from generating profit. The poor performance of these firms is another factor that may have triggered the use of a pessimistic tone, consistent with the findings of Luo \u0026amp; Zhou (\u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2017\u003c/span\u003e), Huang et al. (\u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e2014\u003c/span\u003e)d Augusta \u0026amp; DeAngelis (2020)\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab1\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 1\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eDescriptive Statistics\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"6\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eObs\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eMean\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eStd. Dev.\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eMin\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\"\u003e \u003cp\u003eMax\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e2.036\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e6.113\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.085\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e131.407\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNETTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.014\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.013\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.021\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e.08\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.333\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.471\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e1\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.25\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.433\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e1\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFage\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e32.878\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e16.843\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e2\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e113\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.011\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.383\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-9.498\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e2.072\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFsize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e28.229\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e1.829\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e22.081\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e33.731\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.268\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e1.129\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-1\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e17.84\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLiq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e4.529\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e20.862\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e.009\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e492.408\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eUnivariate analysis was conducted to examine the differences in the main study variables between firms with and without financially experienced CEOs. The test results presented in Table\u0026nbsp;\u003cspan refid=\"Tab2\" class=\"InternalRef\"\u003e2\u003c/span\u003e indicate that those with financial experience expressed a more pessimistic tone in earnings announcements. This finding aligns with studies by Bassyouny et al. (\u003cspan citationid=\"CR11\" class=\"CitationRef\"\u003e2020\u003c/span\u003e) and Davis et al. (\u003cspan citationid=\"CR27\" class=\"CitationRef\"\u003e2015\u003c/span\u003e), who found that the conservative nature of financially experienced CEOs prompts them to adopt a more pessimistic tone, as they prefer to consider the worst-case scenario rather than mislead shareholders with an overly optimistic tone. The results also show that firm value is lower in firms with financially experienced CEOs, which contradicts the second study hypothesis. However, there is no statistical difference in firm value between firms with and without financially experienced CEOs.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab2\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 2\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eUnivariate Analysis\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"4\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eFin\u0026thinsp;=\u0026thinsp;1\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eFin\u0026thinsp;=\u0026thinsp;0\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003ep-value\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eN\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e459\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e921\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e1.8760\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e2.1162\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.7541\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNETTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.0156\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0137\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.0058\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.2484\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.2508\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.5394\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFage\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e32.8933\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e32.8708\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.4907\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.0271\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0031\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.1369\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e28.2305\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e28.2278\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.4896\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.2684\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.2513\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.2120\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLiq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e5.0466\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e4.2709\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.2577\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe results of the univariate analysis are attributed to the influence of industry-specific characteristics on the variables examined. Table\u0026nbsp;\u003cspan refid=\"Tab3\" class=\"InternalRef\"\u003e3\u003c/span\u003e presents the results of the ANOVA test, which indicates a statistical difference in the study variables across industries. Meanwhile, the categorization of variables based on the presence of financially experienced CEOs does not show significant statistical differences, except for the variable measuring pessimistic tone. These findings confirm the existence of an industry effect within the research model; therefore, the study controls for industry effects in the main analysis. Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e illustrates the distribution of CEOs with and without financial experience across different industries. This shows that financially experienced CEOs are most concentrated in the technology industry and least in the energy industry. Moreover, the sample is dominated by the consumer non-cyclical industry. These results indicate that those presented in Tables\u0026nbsp;\u003cspan refid=\"Tab1\" class=\"InternalRef\"\u003e1\u003c/span\u003e and \u003cspan refid=\"Tab2\" class=\"InternalRef\"\u003e2\u003c/span\u003e are not generalizable across all industries.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab3\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 3\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eAnalysis of Variance in Variables by Industry\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"2\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eP Value By Industry\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0048\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNETTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFage\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0100\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0049\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLiq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab4\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 4\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eCEOs with Financial Experience across Industries\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"5\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eFin\u0026thinsp;=\u0026thinsp;1\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003e%\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eFin\u0026thinsp;=\u0026thinsp;0\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003e%\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eEnergy\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e12\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e19.05\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e51\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e80.95\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBasic Materials\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e56\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e30.11\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e130\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e69.89\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustrials\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e40\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e33.33\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e80\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e66.67\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eConsumer Non-Cyclicals\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e102\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e39.08\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e159\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e60.92\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eConsumer Cyclicals\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e77\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e30.31\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e177\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e69.68\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eHealthcare\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e16\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e24.24\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e50\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e75.76\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eProperty \u0026amp; Real Estate\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e70\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e37.23\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e118\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e62.77\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTechnology\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e24\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e40.68\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e35\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e59.32\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eInfrastructure\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e43\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e34.96\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e80\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e65.04\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTransportation \u0026amp; Logistics\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e19\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e31.67\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e41\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e68.33\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eTable\u0026nbsp;\u003cspan refid=\"Tab5\" class=\"InternalRef\"\u003e5\u003c/span\u003e presents the pairwise correlation results. These support the descriptive statistics, indicating that a CEO's financial experience is positively correlated with a pessimistic tone, while ROA exhibits the opposite correlation. The pairwise correlation results also show that pessimistic tone does not have a correlation with firm value, which does not support both hypotheses. However, it is important to note that these results were obtained without considering the control variables.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab5\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 5\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003ePairwise Correlations\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"12\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c7\" colnum=\"7\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c8\" colnum=\"8\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c9\" colnum=\"9\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c10\" colnum=\"10\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c11\" colnum=\"11\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c12\" colnum=\"12\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(1)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(2)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(3)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(4)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(5)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c7\"\u003e \u003cp\u003e(6)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c8\"\u003e \u003cp\u003e(7)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c9\"\u003e \u003cp\u003e(8)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c10\"\u003e \u003cp\u003e(9)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e \u003cp\u003e(10)\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(1) TobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(2) NETTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e.021\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(3) Fin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.019\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e.068*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(4) NETFin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.015\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e.542*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e.648*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(5) AQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.010\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.202*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.003\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.116*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(6) FAge\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.097*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.117*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e.001\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.057*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e.213*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(7) ROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.795*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.165*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e.029\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.024\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e.083*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e.079*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(8) FSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.160*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.266*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e.002\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.118*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e.475*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e.347*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e.193*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(9) Sales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.038\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e.001*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.021\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.015\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.062\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.085*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e.013\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.086\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e(10) Liq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e.015\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e.011\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.018\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e.025\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.057*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.099*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e.010\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.092*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e \u003cp\u003e.029*\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c12\" namest=\"c11\"\u003e \u003cp\u003e1.000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colspan=\"11\" nameend=\"c11\" namest=\"c1\"\u003e \u003cp\u003e*** p\u0026thinsp;\u0026lt;\u0026thinsp;0.01, ** p\u0026thinsp;\u0026lt;\u0026thinsp;0.05, * p\u0026thinsp;\u0026lt;\u0026thinsp;0.1\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"1\" nameend=\"c12\" namest=\"c12\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec10\" class=\"Section2\"\u003e \u003ch2\u003e3.2. Main Results\u003c/h2\u003e \u003cp\u003eTable\u0026nbsp;\u003cspan refid=\"Tab6\" class=\"InternalRef\"\u003e6\u003c/span\u003e presents the empirical results in relation to the study hypotheses. To address the concern that these may be influenced by variations in the sample data across industries, industry fixed effects regression was conducted. The regression results support the first hypothesis, which posits that a pessimistic tone in earnings announcements negatively impacts firm value. This is consistent with previous studies indicating that tone provides an insight into managers\u0026rsquo; outlook and confidence regarding their firms\u0026rsquo; current situation and prospects (Arslan-Ayaydin et al. \u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Feldman et al. \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2010\u003c/span\u003e; Henry \u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e2008\u003c/span\u003e). In line with signalling theory, the results imply that a pessimistic tone reflected in earnings announcements serves as negative signal indicating negative underlying issues within the company (Feldman et al. \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2010\u003c/span\u003e; Henry \u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e2008\u003c/span\u003e; Loughran \u0026amp; Mcdonald \u003cspan citationid=\"CR70\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Luo \u0026amp; Zhou \u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2017\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe results of testing the interaction between a pessimistic tone in earnings announcements and CEOs\u0026rsquo; financial experience and its effect on firm value support the second hypothesis. As shown in Table\u0026nbsp;\u003cspan refid=\"Tab6\" class=\"InternalRef\"\u003e6\u003c/span\u003e, CEOs\u0026rsquo; financial experience reduces the negative impact of a pessimistic tone in earnings announcements on firm value. Those with such experience gain trust from shareholders through their conservative approach. Conservatism is viewed as a mechanism to constrain managerial opportunism that could mislead shareholders (D\u0026rsquo;Augusta \u0026amp; DeAngelis, \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Lafond \u0026amp; Roychowdhury, \u003cspan citationid=\"CR58\" class=\"CitationRef\"\u003e2008\u003c/span\u003e; LaFond \u0026amp; Watts, \u003cspan citationid=\"CR59\" class=\"CitationRef\"\u003e2008\u003c/span\u003e). Consequently, in line with source credibility theory, the conservativeness of financially experienced CEOs, coupled with their knowledge and competence in making appropriate financial decisions for their company, is perceived as a credibility signal. This acts as a peripheral cue that is positivity associated with the message conveyed, which in turn mitigates the effect that a pessimistic tone has on firm value.\u003c/p\u003e \u003cp\u003eThe results for the control variables indicate that audit quality and liquidity are not associated with firm value, while sales growth has a positive association, in line with D\u0026rsquo;Amato and Falivena (\u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2020\u003c/span\u003e), Fosu et al. (\u003cspan citationid=\"CR39\" class=\"CitationRef\"\u003e2016\u003c/span\u003e) and Saleh Aly et al. (\u003cspan citationid=\"CR90\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). The results also show that larger mature firms tend to have lower valuations as their growth opportunities diminish, consistent with evidence presented by Hsu \u0026amp; Chu (\u003cspan citationid=\"CR49\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). A negative coefficient was also observed for ROA, indicating that a higher ROA leads to lower firm value. This may be attributed to the increased trends in income-increasing earnings management during the Covid period (Lassoued \u0026amp; Khanchel, \u003cspan citationid=\"CR62\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; Lee et al., \u003cspan citationid=\"CR64\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Yan et al., \u003cspan citationid=\"CR107\" class=\"CitationRef\"\u003e2022\u003c/span\u003e), which have fostered scepticism among investors regarding higher profits. This finding supports the argument that conservativeness from CEOs with financial experience is highly valued by shareholders.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab6\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 6\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eMultivariate test\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"2\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNETTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-43.310***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-7.29)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.849**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(4.22)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNET*Fin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e30.958**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(9.17)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.187\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(1.11)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFage\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.184***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-7.33)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-7.113***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-18.71)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-1.794**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-5.14)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.151**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(6.67)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLiq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.003\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(1.42)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry Fixed Effect\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eYes\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eR\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.3242\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObs\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"2\"\u003e*** p\u0026thinsp;\u0026lt;\u0026thinsp;0.01, ** p\u0026thinsp;\u0026lt;\u0026thinsp;0.05, * p\u0026thinsp;\u0026lt;\u0026thinsp;0.1\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec11\" class=\"Section2\"\u003e \u003ch2\u003e3.3. Robustness Test\u003c/h2\u003e \u003cp\u003eAs a robustness check, hypothesis testing was conducted with control for year fixed effects to account for variations in the variables caused by year effects. As shown in Table\u0026nbsp;\u003cspan refid=\"Tab7\" class=\"InternalRef\"\u003e7\u003c/span\u003e, the results remain consistent, indicating that a pessimistic tone leads to lower firm valuation, and that CEOs\u0026rsquo; financial experience mitigates the association between the two variables. Additionally, tests controlling for both industry and year effects simultaneously, as well as tests excluding both effects, were performed, yielding results similar to those of the main analysis.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab7\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 7\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eRegression with Industry and Year Fixed Effects\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"5\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c2\" namest=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNETTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e-43.310***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-43.490***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-43.490***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(-7.29)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(-7.43)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(-7.43)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e0.849**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.842**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.842**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(4.22)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(4.12)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(4.12)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNET*Fin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e30.958***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e30.936***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e30.936***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(9.17)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(9.29)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(9.29)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e0.187\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.153\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.153\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(1.11)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.91)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.91)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFage\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e-0.184***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e1.656**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e1.656**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(-7.33)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(5.33)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(5.33)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e-7.113***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-7.117***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-7.117***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(-18.71)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(-18.75)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(-18.75)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e-1.794**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-1.784**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-1.784**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(-5.14)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(-5.09)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(-5.09)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e0.151**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.154**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.154**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(6.67)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(6.84)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(6.84)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLiq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e0.003\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.003\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.003\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e(1.42)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(1.45)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(1.45)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry Fixed Effect\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003eNo\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eNo\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eYes\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eYear Fixed Effect\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003eNo\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eYes\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eYes\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eR\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e0.3242\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.3245\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.3245\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObs\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"5\"\u003e*** p\u0026thinsp;\u0026lt;\u0026thinsp;0.01, ** p\u0026thinsp;\u0026lt;\u0026thinsp;0.05, * p\u0026thinsp;\u0026lt;\u0026thinsp;0.1\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eTo further strengthen the argument that CEOs\u0026rsquo; financial experience mitigates shareholders' negative perceptions of a pessimistic tone in earnings announcements, the sample was divided into two subsamples based on whether or not the CEOs had financial experience. Subsample 1 contains 459 observations representing firms with financially experienced CEOs, while subsample 2 includes 924 observations representing those without such CEOs. Table\u0026nbsp;\u003cspan refid=\"Tab8\" class=\"InternalRef\"\u003e8\u003c/span\u003e presents the results of the regression analyses conducted using both subsamples.\u003c/p\u003e \u003cp\u003eIn subsample 1, a pessimistic tone in earnings announcements is not associated with firm value. In contrast, the regression results from the other subsample indicate that when the CEO lacks financial experience, a pessimistic tone negatively affects firm value. Differences in results are also observed in the relationship between ROA and firm value. In subsample 1, higher ROA is greatly valued by shareholders, whereas the results in subsample 2 indicate the opposite.\u003c/p\u003e \u003cp\u003eThese results indicate that CEOs with financial experience appear to be more trustworthy in the eyes of shareholders. As reported in Table\u0026nbsp;\u003cspan refid=\"Tab8\" class=\"InternalRef\"\u003e8\u003c/span\u003e, ROA has a positive association with firm value when CEOs possess financial experience. However, when they lack such experience, ROA is negatively associated with firm value. This suggests that shareholders have greater confidence in earnings reported by CEOs with financial experience, as their conservativeness reduces the likelihood of earnings management. The trustworthiness of financially experienced CEOs becomes a key aspect that leads shareholders to overlook any pessimistic tone in earnings announcements. This implication is consistent with the second hypothesis and the results presented in Table\u0026nbsp;\u003cspan refid=\"Tab6\" class=\"InternalRef\"\u003e6\u003c/span\u003e.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab8\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 8\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eSubsample Analysis\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"3\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eTobinQ (Fin\u0026thinsp;=\u0026thinsp;1)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eTobinQ (Fin\u0026thinsp;=\u0026thinsp;0)\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNETTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e3.350\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-38.801**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(1.45)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(-6.39)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.370\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.531**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(1.34)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(3.50)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFAge\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.105\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.181**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-1.58)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(-6.20)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e1.394**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-5.998***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(4.51)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(-13.49)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-2.375**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.318*\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-5.20)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(-2.73)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLiq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.002\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.003**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-0.94)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(11.24)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.140**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.040**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(6.76)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(4.93)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eR\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.2206\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.4469\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObs\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e459\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e921\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"3\"\u003e*** p\u0026thinsp;\u0026lt;\u0026thinsp;0.01, ** p\u0026thinsp;\u0026lt;\u0026thinsp;0.05, * p\u0026thinsp;\u0026lt;\u0026thinsp;0.1\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab9\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 9\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eAlternative Measurement of Pessimistic Tone\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"2\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003ePESTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-47.843***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e( -8.00)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.861**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(4.04)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003ePES*Fin\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e24.736***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(11.08)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.167\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(4.04)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFage\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.190***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-8.55)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-7.116***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-18.38)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-1.791**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-5.16)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.154***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(7.69)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLiq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.003\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(1.32)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e_cons\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e59.259**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(6.53)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eR\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.3244\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObs\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"2\"\u003e*** p\u0026thinsp;\u0026lt;\u0026thinsp;0.01, ** p\u0026thinsp;\u0026lt;\u0026thinsp;0.05, * p\u0026thinsp;\u0026lt;\u0026thinsp;0.1\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eTo provide deeper insights into how a pessimistic tone affects firm value, and to further test the robustness of the results, an alternative measure of the study's independent variable was applied. Referencing Ningsih et al. (\u003cspan citationid=\"CR78\" class=\"CitationRef\"\u003e2021\u003c/span\u003e), instead of using the net tone proxy, the pessimistic tone was measured by calculating the number of pessimistic words according to the DICTION 7.0 word list, divided by the total number of words in the earnings announcement. Table\u0026nbsp;\u003cspan refid=\"Tab9\" class=\"InternalRef\"\u003e9\u003c/span\u003e reports the regression results using this altered proxy. They remain consistent with the study hypotheses, with the results presented in the main analysis, and with the other robustness tests.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec12\" class=\"Section2\"\u003e \u003ch2\u003e3.4. Additional Analysis\u003c/h2\u003e \u003cp\u003eCEOs\u0026rsquo; financial experience is part of their functional experience; previous research has argued that this influences corporate strategies and performance. Hambrick \u0026amp; Mason (\u003cspan citationid=\"CR43\" class=\"CitationRef\"\u003e1984\u003c/span\u003e), Peng \u0026amp; Chiu (\u003cspan citationid=\"CR79\" class=\"CitationRef\"\u003e2022\u003c/span\u003e), and Rodenbach \u0026amp; Brettel (\u003cspan citationid=\"CR86\" class=\"CitationRef\"\u003e2012\u003c/span\u003e) categorize such functional experience into two categories: throughput and output experience. Throughput experience refers to career experiences that tend to enhance the efficiency of existing company systems, encompassing areas such as production/operations, finance/accounting, administration and legal matters. Managers with throughput functional backgrounds are generally conservative and risk-averse. They also tend to cut budgets and pursue efficiency-oriented strategies. Conversely, output experience focuses on strategic innovation aimed at unlocking growth opportunities for the firm, which includes marketing and R\u0026amp;D experience. Managers with output functional backgrounds incur more innovation-related expenses (Chakravarty \u0026amp; Grewal, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e2016\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eStudies on innovation during economic crises such as the Covid-19 pandemic indicate that varied approaches are taken by firms. Some reduce R\u0026amp;D expenditure, while others sustain or enhance innovation initiatives to achieve competitive advantages (Cincera et al., \u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Lichtenthaler, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Firms that maintain or enhance innovation activities during times of crisis generally experience significant benefits in the aftermath (Lichtenthaler, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). However, other research indicates that the primary motivation for firms to innovate is the necessity to reduce costs and improve operational efficiency (Montes et al., \u003cspan citationid=\"CR75\" class=\"CitationRef\"\u003e2024\u003c/span\u003e). Therefore, it can be hypothesized that throughput functional backgrounds will be more appreciated by shareholders, especially when firms use pessimistic tones in earnings announcements.\u003c/p\u003e \u003cp\u003eTo examine shareholders' perceptions of CEOs\u0026rsquo; functional experience, this study investigates the role of such experience in mitigating the negative effects of a pessimistic tone on firm value. CEOs with output experience were assigned a value of 1 if they possessed career experience in administration and marketing, and 0 otherwise. Those with throughput experience were given a value of 1 if they had career experience in production, finance, legal matters, or R\u0026amp;D, and 0 otherwise. Table\u0026nbsp;\u003cspan refid=\"Tab10\" class=\"InternalRef\"\u003e10\u003c/span\u003e presents the regression results.\u003c/p\u003e \u003cp\u003eThe findings indicate that throughput experience among CEOs reduces the negative impact of a pessimistic tone on firm value, whereas output experience has the opposite effect. The Covid-19 outbreak had a significant negative economic impact. In terms of saving operating expenses and prevent bankruptcy, organizations experiencing significant sales declines and related employment cuts were unsure about the extent and length of the economic effects of the pandemic (Cui et al., \u003cspan citationid=\"CR22\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). For prospective investors and owners, a volatile market was also brought about by a sharp decline in the stock market and heightened anxiety about the future earnings prospects of companies during the pandemic. Because of the increased risk and uncertainty in the market, investors become more risk cautious and rely more on basic information during market downturns, viewing other information as speculative and noisy (Lang \u0026amp; Maffett, \u003cspan citationid=\"CR61\" class=\"CitationRef\"\u003e2011\u003c/span\u003e). Therefore, when companies employ pessimistic tones in earnings announcements, they will have more faith in CEOs with throughput experience because they are more conservative.\u003c/p\u003e \u003cp\u003eThis paper also separates the categories of CEO throughput experience. Overall, only CEOs\u0026rsquo; financial and legal experience can reduce the negative effect of pessimistic tones in earnings announcements on firm value (not tabulated). Indonesia encounters difficulties in law enforcement, characterized by a lack of legal cohesion, the diminishing authority of enforcement personnel, and insufficient legal awareness among the populace (Munawar, \u003cspan citationid=\"CR76\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). The nation's ineffective law enforcement is partially due to the low ethical standards and professionalism of law enforcers, resulting in corruption and public distrust (Koeswanto et al., \u003cspan citationid=\"CR56\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). In this context, investors find CEOs with legal experience more credible and able to protect the sustainability of companies.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab10\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 10\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eAdditional Analysis with Throughput and Output Experience\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"2\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNETTone\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-36.611**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e( -6.06)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNET*Throu\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e36.584***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(26.37)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNET*Out\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-49.109**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-3.77)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.072\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.42)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFage\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.193***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-9.20)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-7.009***\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-22.27)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-1.815**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(-5.18)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSales\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.133**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(6.94)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLiq\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.004\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(1.55)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e_cons\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e60.026**\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(6.50)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eR\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.3269\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObs\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e1380\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"2\"\u003e*** p\u0026thinsp;\u0026lt;\u0026thinsp;0.01, ** p\u0026thinsp;\u0026lt;\u0026thinsp;0.05, * p\u0026thinsp;\u0026lt;\u0026thinsp;0.1\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003c/div\u003e"},{"header":"4. Discussion","content":"\u003cp\u003eThe study has examined the relationship between qualitative aspects of corporate disclosures (i.e., the tone of earnings announcements) and shareholder perceptions. The findings indicate that a pessimistic tone in earnings announcements leads to lower firm value. This result contributes to understanding of the extent to which information can be extracted from the narrative tone. It is also suggested that a pessimistic tone in earnings announcements provides valuable information regarding a firm's current performance and future prospects, which can serve as a basis for shareholder assessment of it.\u003c/p\u003e \u003cp\u003eMoreover, the study investigates the role of CEOs\u0026rsquo; financial experience in the dynamics between pessimistic tones and firm value. The results indicate that CEOs\u0026rsquo; financial experience mitigates the negative effects of a pessimistic tone on shareholder perceptions. During the Covid-19 pandemic, investors tended to rely on peripheral cues when processing information, rather than conducting detailed analyses of the information provided. Consistent with source-credibility theory, it was found that the perceived trustworthiness and expertise stemming from a CEO's financial experience leads shareholders to disregard any pessimistic tone presented in earnings announcement disclosures. This is because they interpret the credibility signals from the firm's CEO as positive peripheral cues associated with the information conveyed. The study findings provide extended understanding of source credibility theory during the Covid-19 pandemic, which altered shareholder behavior.\u003c/p\u003e \u003cp\u003eThe study findings have several implications. First, it has been found that a pessimistic tone in earnings announcements had a negative effect on firm value during the Covid-19 period. According to signaling theory, investors react more negatively to bad earnings news than to good news because they believe it to be especially harmful (Baier, \u003cspan citationid=\"CR9\" class=\"CitationRef\"\u003e2022\u003c/span\u003e). This discrepancy in investor reaction is significant because it implies that the market is more susceptible to negative information, which can be made worse by economic upheavals caused by crises such as the Covid-19 pandemic (Baek et al., \u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e2020\u003c/span\u003e). In such a case, given that investors were already on edge because of the uncertainty surrounding the pandemic's implications for the economy, the increased volatility seen during this time significantly magnified the impact of pessimistic tones (G. Liu \u0026amp; Sun, \u003cspan citationid=\"CR68\" class=\"CitationRef\"\u003e2022\u003c/span\u003e). The theoretical implication of this is that future studies about Covid-19 should consider the effect of tone in disclosures on stakeholders\u0026rsquo; perceptions. The practical implication is that managers should have paid attention to the tone of their earnings announcements during the Covid-19 period as investors have a negative perception of pessimistic tones used. In relation to regulation, regulators could impose more stringent regulations on the presentation of financial information in annual reports, ensuring that the narrative tone represents the company's financial condition appropriately. This could inhibit the distortion in earnings announcements which convey an excessively optimistic or pessimistic perspective, thus safeguarding investors from possible disinformation.\u003c/p\u003e \u003cp\u003eSecond, the research extends source credibility theory by introducing CEOs\u0026rsquo; financial experience as a moderating factor in the relationship between communication tone and firm value, offering a new perspective on investor behavior. In order to make well-informed judgments, investors frequently depend on the tone and content of corporate communications. However, as COVID-19 obscured the credibility of information, investors needed refined sources to strengthen the credibility of earnings information (D\u0026rsquo;Augusta \u0026amp; Grossetti, \u003cspan citationid=\"CR26\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). CEOs with financial experience can improve the perceived dependability of messages, which in turn can affect investor behavior. For example, research has demonstrated that investor reactions can be influenced by the tone employed during earnings conference calls, and that credibility is a key factor in this dynamic (Fu et al., \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). The theoretical implication of this is that future studies with the pandemic as a background can use source credibility theory to underscore the value of having a credible leader. The practical implication is that corporations should appoint suitable leaders to ensure that, even in the worst conditions such as Covid-19, shareholders maintain their confidence in the organization. With regard to regulations, regulators could contemplate amending corporate governance rules to highlight the significance of financial expertise in senior positions. Requiring or advising that CEOs have such expertise could become a normative practice, guaranteeing that companies are directed by leaders capable of effectively navigating financial complexities. This action could result in enhanced transparency and accuracy in financial reporting and consequently increase investors\u0026rsquo; confidence in companies (Chang et al., \u003cspan citationid=\"CR17\" class=\"CitationRef\"\u003e2024\u003c/span\u003e). Regulatory bodies could also sponsor training and certification programs aimed at enhancing financial management and reporting skills among top executives to encourage financial literacy. By incentivizing or mandating CEOs to acquire such certificates, companies can guarantee that their leadership is adequately equipped to manage financial disclosures responsibly, thus preserving investor trust even when delivering unfavorable information.\u003c/p\u003e \u003cp\u003eThird, the study has found that the legal and financial experience of CEOs can mitigate the negative effect of pessimistic tones in earnings announcements on firm value. The results indicate that the role of CEOs\u0026rsquo; functional experience depends on the institutional context. The theoretical implication of this is that research on the intricate relationship between disclosure tone, investors and CEOs\u0026rsquo; ability should refer to contingency theory and analyze companies in different institutional contexts. Future research should analyze the impact of executive backgrounds on corporate communication strategies. The practical implication is that regulatory organizations should promote corporate governance frameworks that emphasize a combination of legal and financial expertise among executive teams. This diversity could improve the quality of financial reports and strengthen investor relations. Regulators should cultivate an environment that enhances investor confidence in corporate communications, such as increasing legal enforcement and reducing corruption (Rudyanto et al., \u003cspan citationid=\"CR89\" class=\"CitationRef\"\u003e2022\u003c/span\u003e).\u003c/p\u003e"},{"header":"5. Conclusion","content":"\u003cp\u003eThis study has investigated the relationship between the tone of earnings announcements and firm value, particularly focusing on the moderating role of CEOs' financial experience during the COVID-19 pandemic. The findings reveal that a pessimistic tone in earnings announcements negatively affects firm value. This result underscores the significant influence of qualitative aspects of corporate disclosures, suggesting that the tone used in earnings announcements conveys crucial information about a firm's current and future performance.\u003c/p\u003e \u003cp\u003eFurthermore, the study demonstrates that CEOs\u0026rsquo; financial experience mitigates the adverse effects of a pessimistic tone on firm value. Investors, particularly during periods of heightened uncertainty, rely on credibility signals from leadership when interpreting financial disclosures. The results align with source credibility theory, indicating that shareholders perceive financially experienced CEOs as more trustworthy and competent, thereby reducing the negative impact of pessimistic earnings announcements on firm value.\u003c/p\u003e \u003cp\u003eThese findings contribute to the literature in several ways. First, they emphasize the importance of tone in financial communication, particularly during economic crises. Second, they extend source credibility theory by highlighting how CEO characteristics influence investor perceptions. Finally, the study offers practical implications for firms, suggesting that companies should carefully manage the tone of their disclosures and consider the financial expertise of their top executives as a means to sustain investor confidence.\u003c/p\u003e \u003cp\u003eThe study has several limitations. First, there were challenges in identifying CEOs' financial experience because not all companies disclose their backgrounds comprehensively in their annual reports. As an alternative, information on CEOs was sought from LinkedIn, Wikipedia, social media, and relevant news outlets. However, this method does not guarantee that all CEOs with financial experience were identified. Future researchers could utilize professional databases such as Bloomberg that specifically document the backgrounds and experience of CEOs, or employ interview techniques to obtain more accurate and comprehensive information.\u003c/p\u003e \u003cp\u003eSecond, due to the limitations of the DICTION 7.0 application, which can only analyze English words, meaning a lack of a pessimistic word list in Indonesian, the study exclusively focused on earnings announcement narrative disclosures that were in English. To capture a more accurate association between tone and investor perceptions, future researchers should obtain a relevant word list or use word analysis tools that can accommodate multiple languages.\u003c/p\u003e \u003cp\u003eThis study reinforces the idea that beyond financial figures, corporate communication strategies and leadership characteristics play a crucial role in shaping investor sentiment and firm valuation, particularly in times of crisis.\u003c/p\u003e"},{"header":"Declarations","content":"\u003ch2\u003eEthics approval and consent to participate\u003c/h2\u003e\n\u003cp\u003eNot applicable\u003c/p\u003e\n\u003ch2\u003eConsent for publication\u003c/h2\u003e\n\u003cp\u003eNot applicable\u003c/p\u003e\n\u003ch2\u003eFunding\u003c/h2\u003e\n\u003cp\u003eNot applicable\u003c/p\u003e\n\u003ch2\u003eAuthor Contribution\u003c/h2\u003e\n\u003cp\u003eA.R. did conceptualization, methodology, software, validation, formal analysis, investigation, data curation, writing-review and editing, supervision, project administration while S.A.P. found resources, did data curation, wrote original draft preparation, did visualization. All authors reviewed the manuscript.Acknowledgement:We would like to thank Trisakti School of Management for supporting this research.Funding:Not applicable\u003c/p\u003e\n\u003ch2\u003eAcknowledgement\u003c/h2\u003e\n\u003cp\u003eWe would like to thank Trisakti School of Management for supporting this research.- FundingNot applicable- Competing InterestThe authors declare that they have no competing interests- Data AvailabilityAll data generated or analysed during this study are included in this published article\u003c/p\u003e\n\u003ch2\u003eData Availability\u003c/h2\u003e\n\u003cp\u003eData is provided within the manuscript\u003c/p\u003e"},{"header":"References","content":"\u003col\u003e\n\u003cli\u003eAhmadi, A., \u0026amp; Bouri, A. (2018). 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How does the COVID-19 affect earnings management: Empirical evidence from China. \u003cem\u003eResearch in International Business and Finance\u003c/em\u003e, \u003cem\u003e63\u003c/em\u003e, 101772. https://doi.org/10.1016/j.ribaf.2022.101772\u003c/li\u003e\n\u003cli\u003eYing, Q., \u0026amp; He, S. (2020). Is the CEOs\u0026rsquo; financial and accounting education experience valuable? Evidence from the perspective of M\u0026amp;A performance. \u003cem\u003eChina Journal of Accounting Studies\u003c/em\u003e, \u003cem\u003e8\u003c/em\u003e(1), 35\u0026ndash;65. https://doi.org/10.1080/21697213.2020.1822023\u003c/li\u003e\n\u003c/ol\u003e"}],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":true,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":false,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":true,"isPdf":false,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Earnings announcements, CEOs’ Financial experience, Signaling, Firm value, Pessimistic tone","lastPublishedDoi":"10.21203/rs.3.rs-6150474/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6150474/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis study examines the association between pessimistic tones in earnings announcements and firm value, as well as the role of CEOs\u0026rsquo; financial experience during the Covid-19 pandemic. Fixed effects regression was employed to analyze 1,380 firm-year observations from Indonesia Stock Exchange-listed non-financial enterprises during the pandemic. The analysis results indicate that a pessimistic tone in earnings announcements negatively impacts firm value, while the CEO's financial experience reduces this negative effect. The study added to the literature by revealing that CEOs' financial experience acts as a credibility signal for investors, reducing the association between pessimistic tone and firm valuation during pandemic.\u003c/p\u003e","manuscriptTitle":"Ceos’ Financial Experience, Pessimistic Tones in Earnings Announcements and Firm Value: Evidence During the Covid-19 Pandemic","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-03-17 11:53:42","doi":"10.21203/rs.3.rs-6150474/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"f38c58b8-e02a-4ba6-b6cb-f128f1082e4b","owner":[],"postedDate":"March 17th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[],"tags":[],"updatedAt":"2025-03-18T09:38:54+00:00","versionOfRecord":[],"versionCreatedAt":"2025-03-17 11:53:42","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-6150474","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-6150474","identity":"rs-6150474","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}