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Managerial ability and financial statement disaggregation decisions

Author

Listed:
  • Bui, Dien Giau
  • Chen, Yehning
  • Chen, Yan-Shing
  • Lin, Chih-Yung

Abstract

Firms with high-ability management teams disclose more disaggregated information in financial statements than other firms after accounting for endogeneity concerns. Investors deem the disaggregated information disclosed by high-ability managers to be more credible. More disaggregated accounting information reduces stock price crash risk and lowers the cost of equity to a greater extent when provided by high-ability managers. Superior managers’ performance pay is positively related to the level of financial statement disaggregation. These results show that high-ability managers and their firms benefit more from providing granular accounting information.

Suggested Citation

  • Bui, Dien Giau & Chen, Yehning & Chen, Yan-Shing & Lin, Chih-Yung, 2023. "Managerial ability and financial statement disaggregation decisions," Journal of Empirical Finance, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:empfin:v:74:y:2023:i:c:s0927539823000944
    DOI: 10.1016/j.jempfin.2023.101427
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    More about this item

    Keywords

    Disaggregation; Financial statements; Managerial ability; Credibility;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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