Executive age and the readability of financial reports

Qiao Xu, Guy D. Fernando and Kinsun Tam

Advances in accounting, 2018, vol. 43, issue C, 70-81

Abstract: Concerns have been raised by regulators and investors about the increasingly complex financial reports that are becoming incomprehensible to ordinary investors. The readability literature attributes unreadable financial reports to the reporting firms' operational complexity and/or the desire to obfuscate poor performance. At the same time, upper echelons theory from the management literature posits that top managers' characteristics will impact the way the firm is managed, while business and social science research posits that individuals become more capable and ethical as they grow older. We expect older CEOs and executives to be more capable of explaining operating complexities and staying ethical in reporting, thus leading to more readable financial reports. Our results support this view.

Keywords: Financial report readability; CEO age; Executive age; FOG index (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:advacc:v:43:y:2018:i:c:p:70-81

DOI: 10.1016/j.adiac.2018.09.004

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