Joint Meeting of the Mid-Atlantic and Northeast Regions

The Bright Side of Career Concern: CEO Tenure and Narrative Disclosure Complexity

• In Event: Career Concern and Managerial Incentives

Abstract

We examine the relationship between CEO tenure and disclosure complexity. To alleviate career concerns, we find that CEOs provide less obfuscation complex disclosure in their early tenured years in an attempt to alter perceptions about their perceived ability. While, long-serving CEOs become more entrenched, providing more obfuscation complex disclosure. Supporting the career concerns argument, cross-sectional analyses indicate that the early tenured CEOs-obfuscatory complex narrative disclosure negative relationship is more pronounced for firms with good performance and in which CEOs have greater career concerns, for example, when he is young or has a low ability and when his mobility is restricted. Further, we find that the effectiveness of corporate governance in providing transparent disclosure depends on the CEO's tenure stage. In particular, board oversight is more effective in enhancing early tenured CEOs' disclosure practices, while internal governance by subordinates is more effective in constraining long-tenured CEOs' myopic complex disclosure behavior.

Author

• Marwa Soliman, University of Ottawa