KU News: Partisan alignment of CEOs and US president increases biased optimism in corporate disclosures

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Partisan alignment of CEOs and US president increases biased optimism in corporate disclosures
LAWRENCE — With essentially a 50/50 split in both the House and Senate, the country’s political leanings remain equally divided. But for many business leaders, key decisions are based primarily on who is occupying the White House. That idea is explored in a University of Kansas professor’s new scholarly article titled “Political Euphoria and Corporate Disclosures: An Investigation of CEO Partisan Alignment with the President of the United States.”

Biology faculty members honored by Class of 2023 with HOPE Awards for teaching
LAWRENCE — The University of Kansas senior class has honored two faculty members who teach undergraduate biology with 2022 HOPE Awards — to Honor an Outstanding Progressive Educator. Josephine Chandler, associate professor of molecular biosciences, and Eileen Hotze, associate teaching professor of molecular biosciences, were recognized Nov. 19 during the Senior Day football game between KU and Texas.

Full stories below.

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Contact: Jon Niccum, KU News Service, 785-864-7633, [email protected]
Partisan alignment of CEOs and US president increases biased optimism in corporate disclosures
LAWRENCE — With essentially a 50/50 split in both the House and Senate, the country’s political leanings remain equally divided. But for many business leaders, key decisions are based primarily on who is occupying the White House.
“Even CEOs, as business savvy as they might be, can get swept up in partisan euphoria,” said Mehmet Kara, assistant professor of accounting at the University of Kansas.
“They think, ‘My guy is leading the country, so everything is much better.’ Or, ‘The other guy is leading the country, so we’re all doomed.’ This focus causes business leaders to bias their forecasts and reports.”
That is revealed in his new article titled “Political Euphoria and Corporate Disclosures: An Investigation of CEO Partisan Alignment with the President of the United States.” It examines how such alignment between chief executive officers and the U.S. president influences corporate disclosure outcomes, finding evidence that aligned CEOs display greater optimism in their disclosures. It appears in the Journal of Accounting & Economics.
Co-written by Adi Masli and Mazhar Arikan of KU and Yaoyi Xi of San Diego State University, Kara’s research also observes if one party or the other proved more susceptible to this “political euphoria.”
“We found it doesn’t matter whether you’re a Democrat or Republican,” Kara said. “If your candidate is in power, then you’re going to exhibit this type of behavior.”
It is no mirage that partisanship seems worse than ever before. An August survey by Pew Research Center confirms negative sentiment about the opposing party’s policies being harmful to the country remains a primary factor in why Democrats and Republicans choose to affiliate with their party.
Are America’s corporate leaders more partisan than ever before?
He said, “It has unfortunately gotten to where some of these surveys such as Pew show it is the primary identifier for many individuals, even above and beyond religion, race or ethnicity. People will forego their religious beliefs to make sure what they’re doing aligns with their partisan beliefs. So not only is it American business leadership, American life has become extremely partisan.”
Kara’s team scrutinized donations to determine political allegiances.
“Thankfully, we live in a society where everything is still fairly transparent,” he said.
Thus, any political contributions made above a certain dollar amount are catalogued, recorded and available for public disclosure. He utilized information located at the Center for Responsive Politics, which has kept track of every presidential donation since the 1990s.
“By chronicling this throughout time, we were able to create an index of hardcore Republican CEOs who have always donated to the Republican Party, hardcore Democrats who have always donated to the Democratic Party and ‘moderates’ who tend to be more candidate-based,” he said.
Given the number of one-percenters who are CEOs, it might be assumed they typically favor Republican politicians. Interestingly, their allegiance is not as one-sided at people might think.
“There have been previous studies that show whether CEOs identifying with one party or the other influences the way in which they run the company,” Kara said. “Our study goes one level beyond that by examining a phenomenon where if there’s an alignment between their beliefs and the president’s beliefs, it would influence the way in which they forecast and provide disclosure.”
Kara also noted previous studies weighing the effects of CEO overconfidence. Yet in those analyses, the measure of overconfidence has always been something intrinsic to the individual that is not changing over time. You’re either confident because that’s your personality type … or you’re not.
“We bring in a new measure that changes with time because every four years there’s potential for regime change. And every four years you could have a CEO who flips from being confident about business conditions to not being so confident. If you are someone who believes CEO decisions have tangible outcomes that affect financial markets, then that’s something important to keep track of,” he said.
A native of Trabzon, Turkey, Kara has been with KU since 2019. He predominantly focuses on tax research as part of the university’s accounting academic area.
The professor said people should not assume that successful business professionals are free from favoritisms – some of which are based on ideology, not information.
Kara said, “Even the most experienced financial market participants are susceptible to biases that affect their decision making.”
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Contact: Erinn Barcomb-Peterson, KU News Service, 785-864-8858, [email protected], @ebpkansas
Biology faculty members honored by Class of 2023 with HOPE Awards for teaching
LAWRENCE — The University of Kansas senior class has honored two faculty members who teach undergraduate biology with 2022 HOPE Awards — to Honor an Outstanding Progressive Educator.
The HOPE Award was established by the Class of 1959. Today, the award remains the only honor given to faculty by the senior class through the Student Alumni and Endowment Board. Thanks to successful fundraising efforts, 2022 marks the second year that the award has been given to two recipients.
Josephine Chandler, associate professor of molecular biosciences, and Eileen Hotze, associate teaching professor of molecular biosciences, were recognized Nov. 19 during the Senior Day football game between KU and Texas.
As a researcher, Chandler studies how bacteria interact with one another and respond to stress in complex communities. Her research is funded by the National Institutes of Health and has included upending assumptions about how dangerous pathogens respond to acidic environments in the host. Chandler is also part of the leadership team of a recently renewed NIH-funded program to help Native students bridge from Haskell Indian Nations University to KU and prepare for careers in the biomedical sciences.
One student who nominated Chandler noted how she goes “above and beyond” to help each student succeed and how she can accommodate each student’s needs, even in a large class. Another nominator noted that without Chandler, they wouldn’t have been able to continue their journey at KU. “More importantly, I would not have discovered my passion for microbial genetics,” they wrote.
“It is amazing to receive this award and be recognized for my efforts to make science inclusive and exciting, especially during a time when science has become so important to all of us,” Chandler said. “I feel extremely lucky to be able to work with such exceptionally talented students at KU.”
Chandler joined KU in 2013. She earned a doctorate in microbiology from the University of Minnesota after earning a bachelor’s degree in microbiology from the University of Iowa.
Hotze teaches undergraduate biology courses in the College of Liberal Arts & Sciences, including classes on molecular and cellular biology, fundamentals of microbiology and the laboratory component to courses on bacterial infectious disease.
Students who nominated Hotze noted how she wants her students to succeed in class and in the future — and how Hotze provides resources to make that happen. One student wrote how Hotze helped them with their degree path.
“She gives great advice and got me in contact with really helpful people,” the nominator wrote.
Hotze spent more than 15 years as a research scientist at the University of Oklahoma Health Sciences Center prior to joining KU as a full-time teaching faculty member in 2018. She earned her bachelor’s degree and doctorate in microbiology from the University of Oklahoma.
“KU is a fantastic place to work because our students are so enthusiastic and eager,” Hotze said. “Each one of them has a unique experience that they bring with them to KU to make this campus so special. I enjoy getting to know their stories and am fortunate to walk with them during their academic journey.”
“To be awarded the HOPE Award is very humbling,” Hotze said. “I am overwhelmed. They have made such an impact on my life. I am not sure they know this.”
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Erinn Barcomb-Peterson, director of news and media relations, [email protected]

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