The comet’s tail: narrative strategies of low profile CEOs

We study whether CEOs’ career concerns relate to the use of low-profile narrative strategies, particularly among lower-ability CEOs. Using a large sample of US firms’ 10-K annual reports, we document that CEOs use low profile narrative strategies to assuage career concerns, particularly among lower ability CEOs. Narrative strategies are closely linked to managerial human capital and CEO performance assessment concerns, making it important to understand how CEOs shape their narratives in annual reports and navigate evaluation pressures early in their tenure. Overall, our findings demonstrate that CEO-specific, career-linked characteristics and skills shape narratives in annual reports. This has implications for investors, regulators, and other users (e.g. creditors, employees, or governance bodies), who may want to interpret qualitative information with greater attention to CEOs’ career concerns and ability to make more informed and comparable assessments.