Purpose This study examines how age dissimilarity between the Chair and the chief executive officer (CEO) impacts the tone of firms' annual reports. Design/methodology/approach Using a sample of 26,876 firm-year observations from listed Chinese firms between 2010 and 2023, this study empirically tests the hypothesis using ordinary least squares, two-stage least squares test,Heckman two-step selection model, entropy balancing analysis, mediation tests (Baron and Kenny’s (1986) causal-step approach and the bootstrap approach) and mechanism analysis. Findings The results reveal a significant negative association between Chair–CEO age dissimilarity and the positive tone of annual reports. Specifically, a one-standard-deviation increase in Chair–CEO age dissimilarity corresponds to a 0.48% decline in the positive tone. The negative impact is more pronounced in firms with less concentrated controlling rights, stronger external monitoring pressures, higher information asymmetry, higher agency conflicts and family-owned and non-state-owned firms. There are four mediating channels: internal monitoring intensity, tenure overlap, free cash flow and earnings management. This situation reflects the “curbing aggressive reporting” mechanism. Our findings are consistent and robust across alternative measures and endogeneity tests. Research limitations/implications The study’s results imply the need to account for Chair–CEO age dissimilarity in board design and succession planning to improve communication, coordination, cooperation and disclosure quality, especially in Chinese listed firms. Originality/value This is the first empirical study to examine the effect of Chair–CEO age dissimilarity on the tone of annual reports. It contributes to the corporate governance and disclosure tone literature by introducing Chair–CEO age dissimilarity as a critical but underexplored factor and contextualises its influence within China’s distinct cultural and institutional environment, offering new insights into communication dynamics in top management teams.
Hu et al. (Wed,) studied this question.