Professor Justin Davis Published in the Journal of Financial Reporting and Accounting The second-year faculty member co-authored a paper analyzing the effect of CEO age on financial reporting quality and clawback provisions.

By Brian Laubscher
January 18, 2024

Justin Davis, assistant professor of business administration at Washington and Lee University, recently co-authored an article that was published in the Journal of Financial Reporting and Accounting.

The article, titled “CEO age, financial reporting quality, and the role of clawback provisions,” analyzes the effect of CEO age on financial reporting quality proxied by financial statement irregularities and earnings management. The article also considers how the studied relationship is affected by clawback provisions, which allow firms to reclaim compensation paid to executives if based on erroneous financial reporting. Clawback provisions became mandatory for U.S. firms in October 2022.

Davis co-authored the article with his doctoral advisor, Miguel García-Cestona, from Universitat Autònoma de Barcelona. Together, they studied data from 18,492 U.S. firm-year observations from 2003 to 2019, finding evidence that older CEOs are associated with increased financial statement irregularities and earnings management. They also found evidence that the effect of CEO age on financial reporting quality is moderated by clawback provisions.

“One of the main motivators of the study was the shocking rise in U.S. CEO age over recent years,” said Davis. “A group that tracks executive characteristics found that the average CEO age in the U.S. at the time of hire rose from 45.9 in 2005 to 55.5 in 2022. As CEOs become older, the need to understand how organizational outcomes might be affected increases.”

Davis is in his second year as a member of the W&L faculty. He holds a bachelor’s degree in business management economics from the University of California, Santa Cruz, as well as a master’s degree and doctorate from Universitat Autònoma de Barcelona.

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