In the world of company predictions, when bosses share their earnings forecasts, it’s not just about money matters. It’s a window into how they think. And guess what? Their political beliefs play a big role.

Researchers from George Mason University checked out forecasts from CEOs who lean conservative versus those who are more middle-of-the-road or liberal. They used donations to the Republican Party as a measure of conservative thinking. Then, they looked at how accurate these forecasts were by comparing them to the actual financial results.

Making predictions

Turns out, the conservative CEOs were 13-16.5 percent more likely to make predictions in a year. And when they did, they often gave a range of possibilities instead of one specific number, about 12.7 percent more often.

These conservative CEOs also liked to take more time between making predictions and sharing the actual earnings news—around 11 percent longer than their non-conservative counterparts. Surprisingly, their predictions were about 8.7 percent more accurate, probably because they played it safe with their guesses.

To make sure these differences weren’t just because of the type of companies conservative CEOs led, the researchers checked. Nope, the forecasting patterns stood out, and when non-Republicans took over from Republicans, the predictions went down in both quantity and quality, confirming that political beliefs really do play a part.

Controlling expectations

The authors say the difference is because conservative CEOs are more cautious. Since people usually think right-leaning leaders are less likely to take risks, it makes sense that they use predictions to control what the market expects and avoid bad outcomes from not meeting those expectations. The idea is supported by noticing that companies under a conservative CEO, especially those with a lot of institutional ownership and legal risk (meaning they are under a harsh spotlight), are even more careful with their predictions.

But the authors warn against making big assumptions about Democrat and Republican CEOs based on this study. They only looked at CEOs with clear right-wing views, not comparing them directly with left-leaning counterparts.

The researchers stress that, despite the detailed findings, it shows we need more research on how political beliefs influence business decisions.

“CEOs’ political ideology can shape policies of companies, disclosure policies specifically,” the authors conclude. “There aren’t a whole lot of papers looking at this. Politics are very important. First-order, in many cases.”