Managerial ability and accounting comparability: Evidence from Chinese listed firms

Abstract

We explore the impact of management team ability on firm-level accounting comparability. Through using a sample of Chinese listed firms from 2009 to 2022, the paper documents that accounting comparability has an inverse U-shaped association with management team ability where a certain level of managerial ability leads to the highest levels of accounting comparability. Further analysis shows that high-ability managers have different incentives on accounting comparability when compared to low-ability managers, especially when they suffer financing constraints, possess more proprietary information, experience weak market environment, bear excessive price risk and risk premium and work in the politically connected firms.