Religious CEOS and Earnings Informativeness

56 Pages Posted: 21 Oct 2023

See all articles by James Bierstaker

James Bierstaker

Villanova University

Lucy Huajing Chen

Villanova University

Johnny Lee

Drexel University

Tao Sun

CUNY Queens College

Abstract

This study compares the earnings informativeness of firms with religious CEOs with firms without religious CEOs. We manually collect the religious affiliation of ExecuComp CEOs through Marquis Who’s Who and other sources. Our results show that firms with religious CEOs have more informative earnings compared with firms with non-religious CEOs. Also, there is a stronger association between current earnings and future cash flows for firms with religious CEOs than for firms with non-religious CEOs. Additionally, we find that the positive impact of religious CEOs on earnings informativeness is more pronounced when investors face high uncertainty of information contained in the 10-K (i.e., low 10-K readability), when firms are located in areas with lower religious social norms, and when firms have weaker corporate governance. Lastly, we find that earnings are more conservative for firms with religious CEOs than for firms with non-religious CEOs. Overall, our results suggest that CEO religion plays an important role for earnings attributes and our findings are informative to financial statement users and policymakers in understanding the role of CEO personal religion on corporate outcomes.

Keywords: Religious CEO, Earnings informativeness, Earnings conservatism, Cash flows

Suggested Citation

Bierstaker, James and Chen, Lucy Huajing and Lee, Johnny Jiung-Yee and Sun, Tao, Religious CEOS and Earnings Informativeness. Available at SSRN: https://ssrn.com/abstract=4608766 or http://dx.doi.org/10.2139/ssrn.4608766

James Bierstaker

Villanova University ( email )

Villanova, PA 19085
United States

Lucy Huajing Chen (Contact Author)

Villanova University ( email )

United States
610-519-6321 (Phone)

Johnny Jiung-Yee Lee

Drexel University ( email )

3220 Market St.
Philadelphia, PA 19104
United States

HOME PAGE: http://www.lebow.drexel.edu/academics/departments/accounting/faculty/johnnylee

Tao Sun

CUNY Queens College ( email )

Flushing, NY 11367
United States

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