| The objective of this study is to examine the impact of managerial reputation on the financial reporting practices of firms and their operating performance. Using victory in high-profile CEO competitions as a proxy for managerial reputation, I compare within-firm changes in the timeliness of loss recognition, earnings management, and operating performance before and after CEOs win awards. The results indicate that, first, superstar CEOs (i.e. CEOs who win awards) improve the quality of financial reporting by reporting economic losses in a more timely fashion than before winning their award. Second, superstar CEOs are less likely to engage in opportunistic earnings management to meet short-term earnings benchmarks. Finally, firm performance, measured by indicators such as stock returns, return-on-assets, and operating cash flows, improve after superstar CEOs win awards. In contrast, no similar trends are observed for a control sample of non-superstar CEOs whose firms share similar characteristics to those managed by superstar CEOs prior to winning awards. |
