Managerial ability and financial statement disaggregation decisions

Dien Giau Bui, Yehning Chen, Yan-Shing Chen and Chih-Yung Lin

Journal of Empirical Finance, 2023, vol. 74, issue C

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.

Keywords: Disaggregation; Financial statements; Managerial ability; Credibility (search for similar items in EconPapers)
JEL-codes: G14 G34 M41 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:74:y:2023:i:c:s0927539823000944

DOI: 10.1016/j.jempfin.2023.101427

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