Managerial academic experience and tone management: evidence from China

We examine the effect of managerial academic experience on tone management in the corporate annual report. We find that managerial academic experience reduces the likelihood of upward tone management. Furthermore, we find that the impact of academic experience on tone management is intensified when managers have stronger incentives to upwardly manage financial reporting tone and when the outside monitoring environment is weaker. The results hold under a variety of robustness tests. This study enriches the relevant research on executive characteristics and tone management, and the conclusion of this paper provides practical implications to improve the quality of information disclosure.