Do Skillful Management Teams Disclose More Financial Statement Disaggregation?

47 Pages Posted: 14 Jul 2019

See all articles by Dien Giau Bui

Dien Giau Bui

National Taiwan University, Department of Finance, Students

Yan-Shing Chen

National Taiwan University

Yehning Chen

National Taiwan University

Chih-Yung Lin

National Chiao-Tung University

Date Written: February 1, 2019

Abstract

We show that firms with a skillful management team tend to disclose more accounting information than other comparable firms. We explore several channels to explain this finding. First, we find that investors treat the disclosure of skillful management team as more credible. In particular, investors react more (less) significantly to earning announcements of skillful (other) management teams. Second, we find that a higher disclosure quality helps skillful management teams earn higher total compensation. In addition, this effect also reduces the corporate’s crash risk and becomes stronger in the sample of higher takeover probability or information asymmetry. Together, our study provides a very first evidence on how managerial skill determines a firm’s disclosure policy.

Keywords: Disclosure quality, managerial skill, earning announcements, total compensation, takeover probability

JEL Classification: G14, G34, M41

Suggested Citation

Bui, Dien Giau and Chen, Yan-Shing and Chen, Yehning and Lin, Chih-Yung, Do Skillful Management Teams Disclose More Financial Statement Disaggregation? (February 1, 2019). Available at SSRN: https://ssrn.com/abstract=3416018 or http://dx.doi.org/10.2139/ssrn.3416018

Dien Giau Bui

National Taiwan University, Department of Finance, Students ( email )

1, Sec. 4, Roosevelt Road
Taipei
Taiwan

Yan-Shing Chen

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

Yehning Chen

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

Chih-Yung Lin (Contact Author)

National Chiao-Tung University ( email )

Taiwan

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