The effect of smoothing by ex-military CEOs on current earnings informativeness about future cash flows
| Variables | CFOt + 1 | CFOt + 1 | CFOt + 1 |
|---|---|---|---|
| Et | 0.090*** (27.737) | 0.184*** (35.854) | 0.167*** (29.691) |
| CFOt − 1 | 0.074*** (11.879) | 0.031*** (4.324) | 0.028*** (3.734) |
| SMTHt − 4,t | 0.005*** (4.119) | 0.006*** (4.287) | |
| SMTHt − -4,t × Et | 0.059*** (23.547) | 0.051*** (19.251) | |
| SMTHt − 4,t × CFOt − 1 | −0.032*** (−7.717) | −0.035*** (−8.154) | |
| MILITARY_CEO | −0.002 (−0.481) | ||
| MILITARY_CEO × Et | 0.085*** (6.036) | ||
| MILITARY_CEO × CFOt − 1 | −0.000 (−0.019) | ||
| MILITARY_CEO × SMTHt − 4,t | −0.009** (−2.049) | ||
| MILITARY_CEO × SMTHt − 4,t × Et | 0.091*** (7.521) | ||
| MILITARY_CEO × SMTHt − 4,t × CFOt − 1 | 0.015 (0.708) | ||
| Constant | −0.112*** (−7.108) | −0.119*** (−7.605) | −0.115*** (−7.372) |
| Observations | 33,083 | 33,083 | 33,083 |
| Controls | YES | YES | YES |
| Firm FEs and year FEs | YES | YES | YES |
| Type | OLS | OLS | OLS |
| Adj. R-squared | 0.656 | 0.661 | 0.663 |
| Variables | |||
|---|---|---|---|
| 0.090 | 0.184 | 0.167 | |
| 0.074 | 0.031 | 0.028 | |
| 0.005 | 0.006 | ||
| 0.059 | 0.051 | ||
| −0.032 | −0.035 | ||
| MILITARY_CEO | −0.002 (−0.481) | ||
| MILITARY_CEO × | 0.085 | ||
| MILITARY_CEO × | −0.000 (−0.019) | ||
| MILITARY_CEO × | −0.009 | ||
| MILITARY_CEO × | 0.091 | ||
| MILITARY_CEO × | 0.015 (0.708) | ||
| Constant | −0.112 | −0.119 | −0.115 |
| Observations | 33,083 | 33,083 | 33,083 |
| Controls | |||
| Firm FEs and year FEs | |||
| Type | |||
| Adj. | 0.656 | 0.661 | 0.663 |
This table reports the regression results of future cash flows on current earnings, incorporating the three-way interaction among current earnings, income smoothing and CEOs’ ex-military experience, along with other control variables. The dependent variable, CFOt + 1, is one-year-ahead cash flows, measured as cash flows from operations scaled by lagged total assets. MILITARY_CEO is an indicator variable that equals one if the CEO of the firm in a given year has prior military experience, and zero otherwise. Standard errors are clustered at the firm level. The t-statistics are reported in parentheses below. ***, ** and * denote two-tailed significance at the 0.01, 0.05 and 0.10 levels, respectively. All variables are defined in Appendix 1
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