Labor Market Benefit of Disaggregated Disclosure

• 成果类型: Article
• 署名作者: Cao, Sean; Li, Yinghua; Ma, Guang
• 署名单位: University System of Maryland; University of Maryland College Park; Arizona State University; Arizona State University-Tempe; McGill University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12771
• 发表日期: 2022
• 页码: 1726-1757
• 关键词: sfas no. 131; information asymmetry; CORPORATE DISCLOSURE; ceo pay; IMPACT; firm; management; ability; ECONOMICS; turnover

摘要

Asymmetric information is a fundamental friction that results in mismatches and efficiency losses in the labor market. In this study, we posit that more disaggregated financial disclosure by a CEO candidate's prior employer can help the hiring firm better assess the possible fit between its operational needs and the candidate's skill set. Using a mandatory segment reporting reform in the United States (SFAS 131) as an exogenous shock to disclosure disaggregation, we find a significant increase in the firm-CEO match quality when the hiring firm has access to more disaggregated segment information about the external candidate's past employment. Furthermore, the improvement in firm-CEO matching is greater when segment information is incrementally more useful for evaluation of candidate skills. These findings reveal a novel labor market benefit of disaggregated financial disclosure: alleviating pre-hiring information deficiencies and facilitating efficient allocation of CEO talent across firms.