Title: Celebrity CEOs and financial statement readability

Authors: Candra Chahyadi; Trang Doan; Benjamim Eduardo

Addresses: Eastern Illinois University, Charleston, Illinois, USA ' Eastern Illinois University, Charleston, Illinois, USA ' Eastern Illinois University, Charleston, Illinois, USA

Abstract: We examine whether celebrity CEOs make financial statements more readable. Evidence shows that 10-K report readability improves significantly within three years after a CEO won an award. The results indicate that celebrity CEOs have an incentive to safeguard and/or improve their reputation. Our results survive a battery of robustness tests, including the use of the propensity score subsample and the test of CEOs' change in behaviour after winning awards. This paper contributes to the extant CEO turnover literature by providing a novel practical insight into the importance of award-winning CEOs on firm value. More importantly, it also provides a new perspective about how award-winning events could impact CEO compensation negotiations in the future.

Keywords: celebrity CEO; CEO reputation; financial statement readability; fog index; Flesch-Kincaid index.

DOI: 10.1504/IJGFI.2023.131489

International Journal of Governance and Financial Intermediation, 2023 Vol.1 No.4, pp.351 - 368

Received: 27 Aug 2022
Accepted: 14 Mar 2023
Published online: 14 Jun 2023 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article