The Effect of CEO Conscientiousness on Financial Statement Comparability

This study examines the relationship between CEO conscientiousness and financial statement comparability, a key aspect of financial reporting quality. Using a machine-learning-based natural language processing model to analyze transcripts of quarterly earnings calls and obtain conscientiousness score for CEOs, we find a positive association between CEO conscientiousness and financial statement comparability in a sample of publicly traded US firms from 2008 to 2019. Our findings suggest that conscientious CEOs are more likely to adopt in dustry-wide accounting practices, resulting in more comparable accounting reports. Furthermore, we demon strate that the effect of CEO conscientiousness on financial statement comparability is more pronounced when the CEO has greater power. Our research contributes to the existing literature on financial statement com parability by highlighting the importance of considering the role of CEO personality traits in shaping financial reporting quality. Our findings have important implications for accounting practitioners seeking to improve financial reporting quality.