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.