This study tests whether firms seek to mitigate the adverse effects of Financial Reporting Complexity (FRC) by investing in accounting expertise. We develop a measure of FRC based on the complexity of accounting standards that govern annual disclosures. We find that FRC is positively related to the accounting expertise on a firm’s board of directors and audit committee. We also find that accounting expertise mitigates the relation between FRC and negative reporting outcomes. Collectively, this study increases our understanding of the actions firms take to mitigate the negative consequences of FRC, and the role of accounting expertise in this setting.

We examine changes in CEOs' disclosure styles in quarterly earnings conference calls over their tenure. Our longitudinal analysis of newly hired CEOs shows that CEOs' forward-looking disclosures and their disclosures' relative optimism decline in their tenure. Further, externally hired and inexperienced CEOs are more future-oriented, and younger CEOs exhibit greater optimism in their disclosures. We also find that non-CEO executives' disclosure styles remain time-invariant over their CEOs' tenure. Our evidence is consistent with uncertainty reduction about managers' ability over their tenure (1) reducing the demand for and the supply of forward-looking disclosures, and (2) attenuating managerial career concerns leading to the decline in disclosure optimism.