Managerial short-termism and financial statement comparability

This study examines the association between managerial short-termism and financial statement comparability. Using a short-termism measure constructed through textual analysis and machine learning based on a Chinese language setting in management discussion and analysis (MD & A), we find that firms with higher short-termism produce financial statements with lower comparability and that this effect disappears in short-horizon industries. We further find that the increased comparability is associated with an improvement in analysts' forecasts only in non-short-horizon industries. Overall, our findings suggest that firms with greater managerial short-termism are more likely to have unusual corporate behaviours, thus having worse comparability with other firms.