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CEO religious university affiliation and financial reporting quality

Author

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  • Yu Chen
  • Xiaoyan Chu
  • Jung Chul Park
  • Jared S. Soileau

Abstract

Utilising a novel proxy for CEO religiosity that is based on graduation from a religious university, we document evidence that a CEO’s religiosity improves financial reporting quality. This effect is more pronounced when the firm is located in an area with higher geographical religiosity or more social capital, suggesting that a favourable environment facilitates the CEO religiosity effect. We also find that analyst forecasts are more accurate for firms led by a religious CEO, and that fewer analysts follow such firms, consistent with the view that there is less need for analyst service if the firm provides high‐quality information. We develop a series of tests to alleviate endogeneity concerns, including a reverse causality test, a difference‐in‐differences test based on a sample of exogenous CEO turnovers, and a placebo test. Our evidence suggests a causal explanation of the effect of CEO religiosity on financial reporting quality.

Suggested Citation

  • Yu Chen & Xiaoyan Chu & Jung Chul Park & Jared S. Soileau, 2022. "CEO religious university affiliation and financial reporting quality," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 417-468, March.
    • Handle: RePEc:bla:acctfi:v:62:y:2022:i:1:p:417-468
    DOI: 10.1111/acfi.12794
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