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Local CEOs, career concerns and voluntary disclosure

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  • Yaqin Hu

Abstract

I study whether the management guidance provided by local chief executive officers (CEOs) differs from the guidance provided by nonlocal CEOs. The geographic preferences of the CEOs lead to segmented executive labor markets, which impose higher relocation costs and give rise to lower job mobility. I find that local CEOs, who grew up in the same states where the firm headquarters are located, provide fewer items in guidance and less frequent guidance than nonlocal CEOs. I also show that local CEOs have greater asymmetric withholding of bad news relative to good news and that they increase their disclosure during economic downturns in their home states. Collectively, these findings suggest that the geographically segmented CEO labor markets play an important role in the disclosure choices of CEOs.

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  • Yaqin Hu, 2023. "Local CEOs, career concerns and voluntary disclosure," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(3-4), pages 565-597, March.
    • Handle: RePEc:bla:jbfnac:v:50:y:2023:i:3-4:p:565-597
    DOI: 10.1111/jbfa.12648
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    Cited by:

    1. Liu, Xinghe & Zhong, Weifeng & Chen, Jing, 2023. "Stay home, stay safe: CEO hometown identity and default risk," Finance Research Letters, Elsevier, vol. 57(C).
    2. Chen, Jing & Hong, Junjie & Zhong, Weifeng & Wang, Chengqi & Liu, Xinghe, 2024. "Doing right at home: Do hometown CEOs curb corporate misconduct?11Chengqi Wang acknowledges the financial support of National Natural Science Foundation of China (No. 72332005). Xinghe Liu acknowledge," Technological Forecasting and Social Change, Elsevier, vol. 205(C).

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