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CEO left-handedness and readability

Author

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  • Chen, Xin
  • Park, June Woo
  • Tsang, Albert
  • Xin, Yingying

Abstract

We examine the relationship between CEO handedness and readability of narrative disclosures in the management discussion and analysis (MD&A) sections of annual reports. Using a sample of U.S. S&P 500 firms, we find that firms run by left-handed CEOs generally tend to produce more readable MD&A than their counterparts. Cross-sectional testing shows that the association between left-handed CEOs and MD&A readability is more pronounced for firms with complex business operations, suggesting that the readability-handedness relation is moderated by the firm's characteristics related to the need for more communication abilities. Further analyses provide evidence that MD&A readability is a significant channel through which left-handed CEOs decrease costs of equity capital and increase earnings quality. Overall, our findings support the conjecture that left-handed CEOs tend to possess enhanced communication abilities, highlighting a novel personal characteristic that can offer valuable insights into a firm's information environment.

Suggested Citation

  • Chen, Xin & Park, June Woo & Tsang, Albert & Xin, Yingying, 2025. "CEO left-handedness and readability," International Review of Financial Analysis, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:finana:v:105:y:2025:i:c:s105752192500496x
    DOI: 10.1016/j.irfa.2025.104409
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