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Do generalist CEOs undermine financial statement comparability?

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  • Kim, Kyeongmin

Abstract

This study examines whether Chief Executive Officers (CEOs) with broader career experience, referred to as generalist CEOs, undermine financial statement comparability. Drawing on 25,177 U.S. public firm-year observations from 1992 to 2022, our main result indicates that a more generalist CEO is linked to lower comparability in corporate reporting. Furthermore, newly appointed CEOs reinforce this negative relationship, particularly when the incoming CEOs are generalists. The mechanism tests reveal that increased earnings management, leverage, and intangible capital partly explain the negative relationship between generalist CEOs and financial statement comparability. Additional analyses indicate that factors such as managerial ability, product market fluidity, and Tobin's Q can amplify the negative effect of the General Ability Index (GAI), whereas having high comparability peers mitigates it. Using propensity score matching, entropy balancing, a coefficient stability test, and an instrumental variable approach, we address omitted variable bias and enhance the causal interpretation. Overall, our findings suggest that generalist CEOs undermine financial reporting uniformity.

Suggested Citation

  • Kim, Kyeongmin, 2025. "Do generalist CEOs undermine financial statement comparability?," Finance Research Letters, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325005951
    DOI: 10.1016/j.frl.2025.107332
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