Labor Market Benefit of Disaggregated Disclosure*

Sean Cao, Yinghua Li, Guang Ma

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


Asymmetric information is a fundamental friction that results in mismatches and efficiency losses in the labor market. In this study, we posit that more disaggregated financial disclosure by a CEO candidate's prior employer can help the hiring firm better assess the possible fit between its operational needs and the candidate's skill set. Using a mandatory segment reporting reform in the United States (SFAS 131) as an exogenous shock to disclosure disaggregation, we find a significant increase in the firm-CEO match quality when the hiring firm has access to more disaggregated segment information about the external candidate's past employment. Furthermore, the improvement in firm-CEO matching is greater when segment information is incrementally more useful for evaluation of candidate skills. These findings reveal a novel labor market benefit of disaggregated financial disclosure: alleviating pre-hiring information deficiencies and facilitating efficient allocation of CEO talent across firms.

Original languageEnglish (US)
Pages (from-to)1726-1757
Number of pages32
JournalContemporary Accounting Research
Issue number3
StatePublished - Sep 1 2022


  • CEO hiring
  • asymmetric information
  • disclosure disaggregation
  • executive labor market
  • labor market frictions
  • matching

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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