Local CEOs, Career Concerns, and Voluntary Disclosure

I study whether the management guidance provided by local CEOs differs from the guidance provided by nonlocal CEOs. The geographic preferences of the CEOs lead to segmented executive labor markets, which impose higher costs to relocate and give rise to career concerns. I find that local CEOs, who grew up in the same states where the firm headquarters are located, provide fewer items in guidance and less frequent guidance than nonlocal CEOs. I also show that local CEOs have greater asymmetric withholding of bad news relative to good news and that they increase their disclosure during economic downturns in their home states. Collectively, these findings suggest that the geographically segmented CEO labor markets play an important role in disclosure choices of CEOs.