Financial reporting consequences of CEOs' early-life exposure to disasters and violent crime

IF 1.2 Q3 BUSINESS, FINANCE

Advances in Accounting Pub Date : 2023-09-20 DOI:10.1016/j.adiac.2023.100698

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Abstract

Understanding the behavior of chief executive officers (CEOs) enables investors, regulators, and others to better appreciate CEOs' corporate decisions. Among the many aspects that determine CEO behavior are early-life experiences, we examine whether a CEO's exposure to two important events—fatal natural disasters and violent crime—during the individual's formative years is associated with the firm's financial reporting outcomes. We argue that a CEO with early life exposure to fatal natural disasters and violent crime may be over-confident when dealing with risk and is more likely to make riskier decisions. However, this relationship becomes negative when the exposure reaches a certain level, consistent with the CEO becoming risk-averse when making business decisions (Bernile, Bhagwat, & Rau, 2017). Consistently, we report evidence of a U-shaped association between financial reporting quality and both types of early-life exposures. In addition, we find that the link between a CEO's early-life exposures and financial reporting quality is more pronounced in firms with greater incentives to manage earnings.

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首席执行官早年遭遇灾难和暴力犯罪对财务报告的影响

了解首席执行官（CEO）的行为有助于投资者、监管者和其他人更好地理解首席执行官的公司决策。在决定首席执行官行为的诸多方面中，早年的生活经历是其中之一，我们研究了首席执行官在个人成长时期所经历的两个重要事件--致命的自然灾害和暴力犯罪--是否与公司的财务报告结果有关。我们认为，早年经历过致命自然灾害和暴力犯罪的首席执行官在应对风险时可能会过于自信，更有可能做出风险更大的决策。然而，当暴露程度达到一定程度时，这种关系就会变成负相关，这与首席执行官在做出商业决策时变得规避风险是一致的（Bernile, Bhagwat, & Rau, 2017）。与此一致，我们报告的证据表明，财务报告质量与两类早期风险敞口之间存在 U 型关系。此外，我们还发现，首席执行官的早年风险与财务报告质量之间的联系在盈利管理激励更强的公司中更为明显。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Advances in Accounting BUSINESS, FINANCE-

CiteScore

2.50

自引率

6.20%

发文量

期刊介绍： Advances in Accounting, incorporating Advances in International Accounting continues to provide an important international forum for discourse among and between academic and practicing accountants on the issues of significance. Emphasis continues to be placed on original commentary, critical analysis and creative research.