An analysis of proxy statement leadership structure justification disclosures

Xiaoyan Cheng, David Smith () and Paul Tanyi
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Xiaoyan Cheng: University of Nebraska-Omaha
David Smith: University of Nebraska-Lincoln
Paul Tanyi: University of North Carolina-Charlotte

Review of Quantitative Finance and Accounting, 2018, vol. 51, issue 4, No 7, 1106 pages

Abstract: Abstract The Dodd-Frank Act’s qualitative disclosure requirements have prompted a call in the accounting literature for greater qualitative disclosure scrutiny. In this paper, we investigate the informativeness of qualitative leadership justification disclosures required by Section 972 of the Dodd-Frank Act. The disclosures are divided between justifying combining the CEO and Chairman of the Board (CEO Duality) and splitting these two positions (split structure). We use content analysis in our investigation. We discover that the two types of justifications are very different. The split structure disclosures tend to be ‘boiler plate’ and lack informativeness. In contrast, our tests suggest that CEO Duality justifications are informative. Our tests suggest that disclosures’ intensities in CEO Duality firms are positively associated with an increasing volume of information that supports CEO Duality as the more appropriate leadership structure choice. Additionally, our test results show that leadership disclosures change users risk perception, but only for CEO Duality firms. This suggests that investors believe in and are using the disclosures when making their investment decisions.

Keywords: Leadership structure disclosures; Content analysis; Informativeness; Dodd-Frank Act (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11156-017-0697-y

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