Foreign Experienced CEOs’ and Financial Statement Comparability

Ning Ding, Irfan Ullah and Khalil Jebran

Emerging Markets Finance and Trade, 2022, vol. 58, issue 13, 3751-3769

Abstract: This research examines whether the characteristics of top management teams are related to financial statement comparability. Considering the foreign experienced CEOs (FCEOs) in Chinese listed firms from 2005 to 2018, we show that it can increase financial statement comparability. We argue that firms led by FCEOs will enhance information environment and governance mechanisms by minimizing agency issues, consequently generating more comparable financial statements. Through further investigation, we find that the relationship between FCEOs and comparability is stronger when CEOs possess a financial and accounting background and when they have overseas professional experiences. fthe relationship is weaker with the existence of higher economic policy uncertainty. Finally, we identify financial reporting as an important channel that explains the relationship between FCEOs and comparability. Findings remain consistent after numerous robustness checks and supplementary investigations comprising lag of independent variables, generalized method of moment, instrumental variable approach, propensity score matching, and alternative comparability measures. Overall, the findings suggest that CEOs’ foreign experiences are associated with corporate outcomes.

Date: 2022
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DOI: 10.1080/1540496X.2022.2073814

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