Implied Tradeoffs of Chief Financial Officer Accounting Expertise: Evidence from Firm-Manager Matching

2020 ◽  
Author(s):  
Darren Bernard ◽  
Weili Ge ◽  
Dawn Matsumoto ◽  
Sara Toynbee
Keyword(s):  
Financial Reporting ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Management Team ◽  
Senior Management ◽  
Chief Financial Officer ◽  
Ex Post ◽  
Key Skills ◽  
Accounting Expertise ◽  
Executive Officers

We present evidence that although individuals with accounting expertise bring key skills to the financial reporting responsibilities of the chief financial officer (CFO) position, they tend to lack educational and career experiences relevant to nonaccounting responsibilities (e.g., operations and strategy). Assuming boards’ perceptions of CFO accounting expertise are correct on average, we provide evidence of tradeoffs of CFO accounting expertise by examining how differences in CFO backgrounds shape executive employment decisions. Firms with greater demand for nonaccounting expertise are less likely to hire an accounting expert CFO, consistent with ex ante firm-manager matching. Ex post, significant declines in firm-manager fit predict CFO turnover and other compensating changes in the composition of the senior management team. Accounting expert CFOs are also less likely to become chief executive officers, suggesting that CFO experience does not fully mitigate these tradeoffs. Collectively, the results suggest important tradeoffs inherent to CFO accounting expertise that shape the structure of the senior management team. This paper was accepted by Suraj Srinivasan, accounting.

scholarly journals Strategy and sustainability: a strategic logic for engagement with the environment

2015 ◽  
Vol 1 (1) ◽  
Author(s):  
Mike Rosenberg
Keyword(s):  
Energy Efficiency ◽  
Chief Executive Officers ◽  
Environmental Performance ◽  
Boards Of Directors ◽  
Chief Executive ◽  
Senior Management ◽  
General Lack ◽  
Sustainability Reports ◽  
Executive Officers ◽  
Strategic Logic

Abstract While many firms today routinely publish sustainability reports, work to increase their energy efficiency and market some part of their products or services to customers who are in some way interested in their environmental performance, there still appears to be a general lack of engagement on the issue of the environment from Chief Executive Officers and members of Boards of Directors. Despite years of effort and thousands of scholarly articles, academia has yet to develop a compelling framework with which to engage Senior Management. The article proposes such a framework based on an idea called environmental sensibility and the degree of compliance a firm chooses to pursue.

scholarly journals Do the highest-paid CEOs affect the accounting conservatism? An empirical investigation in France

2021 ◽  
Vol 10 (2) ◽  
pp. 96-107
Author(s):  
Amal Aguir ◽  
Ahmad Alqatan ◽  
Bilel Bzeouich
Keyword(s):  
Chief Executive Officers ◽  
Stock Exchange ◽  
Chief Executive ◽  
Accounting Conservatism ◽  
Managerial Accounting ◽  
Accounting Performance ◽  
Ex Post ◽  
Executive Remuneration ◽  
Negative Effect ◽  
Executive Officers

Based on 1575 firms-year observations from French companies listed on the Paris stock exchange from 2009 to 2017, this research study investigates the linkage between accounting conservatism and highest-paid chief executive officers (CEOs) and if this linkage increases as executive remuneration-performance sensitivity increases. The study’s findings show that there is a negative association between accounting conservatism and highest-paid CEOs. These findings suggest that the highest-paid CEOs can manage and restrict managerial accounting choices for their own gains, and, in turn, this has a negative effect on accounting conservatism. Firstly, in order to achieve generally discretionary goals, they distort the accounting figures by overvaluing their companies’ gains. Secondly, the negative linkage between accounting conservatism and highest-paid CEOs increases when they receive greater remuneration incentives for accounting performance. These findings indicate that powerful CEOs are incentivized to adjust earnings since the greater incentives help them to inflate their companies’ accounting results; to distort accounting performance, and provide investors with misleading information. In turn, such actions generate the ex-post settling up problems and end, unfortunately, in fraudulent behaviors. This study contributes to the literature that studies the relationship between accounting conservatism and the highest-paid senior executives in order to identify accounting conservatism (Iwasaki, Otomasa, Shiiba, & Shuto, 2018; Li, Henry, & Wu, 2019; Haider, Singh, & Sultana, 2021).

scholarly journals A Influência das Redes de Cooperação no Desenvolvimento de Micro e Pequenas Empresas (MPEs)

2015 ◽  
Vol 13 (31) ◽  
pp. 259
Author(s):  
Gustavo Henrique Silva de Souza ◽  
Nilton Cesar Lima ◽  
Jorge Artur Peçanha de Miranda Coelho ◽  
Sonia Valle Walter Borges de Oliveira ◽  
Cláudia Maria Milito
Keyword(s):  
Chief Executive Officers ◽  
Chief Executive ◽  
Ex Post ◽  
Ex Post Facto ◽  
Executive Officers

<p>A competitividade acirrada e a necessidade de melhores posições no mercado têm levado micro e pequenas empresas à formação de redes de cooperação interempresarial, tendo como meta se manterem no mercado competitivo pelo compartilhamento de recursos e conhecimento. De tal modo, este artigo teve por objetivo investigar possíveis influências de redes de cooperação no desenvolvimento de micro e pequenas empresas na cidade de Maceió-AL, a partir da perspectiva dos dirigentes dessas redes. Assim, em um estudo <em>ex-post-facto</em>, de cunho exploratório, foram entrevistados os CEOs (<em>Chief Executive Officers</em>) de quatro grandes redes da região, em que, através do <em>software</em> Alceste foram realizadas análises de conteúdo informatizadas com o apoio de técnicas estatísticas de χ<sup>2 </sup>(coeficiente de associação) e Análise Fatorial de Correspondência. Os resultados mostram que as redes têm gerado renda com o incentivo à criação de empregos e melhorado a qualificação produtiva das empresas por meio da promoção de cursos e capacitações, o que têm fortalecido os pequenos mercados, tendo um papel fundamental no desenvolvimento econômico local. Apesar disso, a formação de redes na região tem sido contingente à situação, uma vez que a consolidação no mercado competitivo não se consegue apenas com iniciativas individualizadas. Isto é, os empresários tendem às parcerias, porém de maneira imatura, sem a preocupação com elementos estratégicos, tendo-se as redes como um refúgio para a sobrevivência organizacional ou para apoios financeiros, subsídios ou financiamentos.</p>

Why Malaysian Companies Are Involved in Related Party Transactions (RPT) in the Context of Corporate Governance (CG)

2021 ◽  
pp. 296-317
Author(s):  
Suleman Sherali Kamwani ◽  
Sofri B. Yahya
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Related Party Transactions ◽  
Good Corporate Governance ◽  
Corporate Governance Mechanisms ◽  
Monitoring And Enforcement ◽  
And Performance ◽  
Executive Officers

The regulations related to corporate governance mechanisms such as the sensitivity of pay and performance of chief executive officers, board characteristics, and watches outside of those that are well connected in related party transactions (RPTs)in Malaysia are struggling from the monitoring and enforcement of good corporate governance. The primary aims of this study are to investigate the gap that exists in Malaysian company failures due to appropriate related party transactions and to evaluate the impact of good corporate governance on shareholders' confidence in related party transaction (RPTs) disclosures from the Malaysian Accounting Standards Board (MASB) of regulations. In the year 2000, a study was done by Claessens that examined the data of 236 Malaysian public organizations. The study found the dominancy of a large block of shareholders in organizations in addition to weak institutional structures. This chapter focuses on the usage of related party transactions undertaken to benefit Malaysian companies which have led to financial reporting disclosure information.

SEC enforcement actions getting up close and personal

2016 ◽  
Vol 17 (1) ◽  
pp. 131-132
Author(s):  
Matthew E. Kaplan ◽  
Alan H. Paley ◽  
Jonathan R. Tuttle
Keyword(s):  
Financial Reporting ◽  
Chief Executive Officers ◽  
Audit Committee ◽  
Chief Executive ◽  
Chief Financial Officers ◽  
Securities Fraud ◽  
Content Type ◽  
Securities Law ◽  
Public Company ◽  
Executive Officers

Purpose To alert public company management and directors to several recent SEC enforcement actions involving executives and other senior personnel arising out of securities law violations. Design/methodology/approach Reviews a series of enforcement actions against four chief executive officers, four chief financial officers, an audit committee chair, and one outside auditor (BDO USA LLC) and five of its partners arising out of securities law violations by four different corporations (MusclePharm Corporation, Bankrate, Inc., KIT Digital, Inc. and General Employment Enterprises, Inc.). Each of the actions involved financial reporting and disclosure violations. Also highlights the need for directors and senior management to maintain a sharp focus on their company’s controls and disclosure practices. Findings The SEC’S actions may portend renewed determination by the agency to hold executives and directors, as well as outside professionals, accountable for securities fraud and disclosure violations committed by corporations. Originality/value Practical guidance from experienced securities lawyers.

Executive Accountants and the Reliability of Financial Reporting

2020 ◽  
Author(s):  
Adrienne Rhodes ◽  
Dan Russomanno
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Research Question ◽  
Positive Association ◽  
Chief Executive ◽  
Future Research ◽  
Chief Financial Officer ◽  
Accrual Quality ◽  
Material Weaknesses ◽  
Executive Officers

Using hand-collected data from mandatory disclosures of executive officers, we examine financial reporting outcomes associated with delegating significant accounting responsibilities to an executive accountant, not concurrently serving as the chief financial officer or chief executive officer. We find executive accountants are associated with a significant reduction in the likelihood of restatement. Moreover, we find evidence of a positive association between executive accountants and accrual quality and faster remediation of material weaknesses in internal control when an executive accountant is present. Taken together, this evidence is consistent with more reliable financial reporting at firms with an executive accountant. In contrast, accountants identified in commonly used datasets (i.e., Execucomp or BoardEx) are not consistently associated with the reliability of financial reporting. We highlight the significant differences between datasets, largely attributable to the objectives and sources of the underlying data. We conclude that Execucomp and BoardEx are not substitute datasets for the executive officers disclosed in firms’ 10-K and proxy statement filings. Furthermore, we caution future research to consider which data are most appropriate in the context of each research question. This paper was accepted by Shiva Rajgopal, accounting.

scholarly journals The Effect Of Chief Executive Officers Turnover On International Financial Reporting Standards Reconciliation

2015 ◽  
Vol 31 (5) ◽  
pp. 1851
Author(s):  
Eun Sil Choi ◽  
Chang Seop Rhee
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Ceo Turnover ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Executive Officers ◽  
The Impact

We investigate the impact of Chief Executive Officer (CEO) changes on International Financial Reporting Standards (IFRS) reconciliation. Since January 1st, 2011 all Korean listed companies are required to adopt IFRS in their separate and consolidated accounts. To aid investors in evaluating corporate performance over time, the companies must restate the K-GAAP financial statements for 2010 under IFRS. We find that negative IFRS reconciliation is more frequent for firms with CEO turnover in 2011. The result suggests that new CEOs have an incentive to report lower earnings through IFRS reconciliation for the purpose of big bath. Additionally, in order to examine whether new CEOs incentive of the negative IFRS reconciliation is existed in different corporate governance levels, we classify the companies into strong and weak corporate governance. From the test, we find that their incentive of negative IFRS reconciliation is disappeared (existed) in the companies with strong (weak) corporate governance. This study will contribute to academics and disclosure-related practitioners by providing valuable information of the CEO incentive regarding IFRS reconciliation. We believe that our empirical evidence will be helpful to market participants when they make a business decisions in case of CEO turnover.

Financial Reporting Transparency and Earnings Management (Retracted)

2006 ◽  
Vol 81 (1) ◽  
pp. 135-157 ◽  
Author(s):  
James E. Hunton ◽  
Robert Libby ◽  
Cheri L. Mazza
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Stock Prices ◽  
Chief Executive Officers ◽  
Chief Executive ◽  
Comprehensive Income ◽  
Income Reporting ◽  
Executive Officers ◽  
Relationship Of ◽  
The Relationship

Prior research indicates that greater transparency in reporting formats facilitates the detection of earnings management. The current study hypothesizes and demonstrates that greater transparency in comprehensive income reporting also reduces the likelihood that managers will engage in earnings management in the area of increased transparency. In our experiment, 62 financial executives and chief executive officers decide which available-for-sale security to sell from a portfolio. We manipulate the transparency of comprehensive income reporting and the relationship of projected earnings to the consensus forecast in a 2×2 between-subjects design. When projected earnings are below (above) the consensus forecast, participants sell securities that increase (decrease) earnings. However, the rarely used, more transparent format for reporting comprehensive income significantly reduces both income-increasing and income-decreasing earnings management. Participants in the less transparent setting indicate that earnings management attempts will not be obvious to readers, will improve stock prices, and have no effect on management's reputation for reporting integrity. Conversely, respondents in the more transparent condition suggest that earnings management will be obvious to readers, harmful to stock prices, and damaging to reporting reputation. Results of this study suggest that more transparent reporting requirements will reduce earnings management in the area of increased transparency or change the focus of earnings management to less visible methods.

Humble Chief Executive Officers’ Connections to Top Management Team Integration and Middle Managers’ Responses

2014 ◽  
Vol 59 (1) ◽  
pp. 34-72 ◽  
Author(s):  
Amy Y. Ou ◽  
Anne S. Tsui ◽  
Angelo J. Kinicki ◽  
David A. Waldman ◽  
Zhixing Xiao ◽  
...  
Keyword(s):  
Chief Executive Officers ◽  
Middle Managers ◽  
Top Management Team ◽  
Chief Executive ◽  
Management Team ◽  
Top Management ◽  
Executive Officers ◽  
Team Integration

Sales Force Downsizing and Firm-Idiosyncratic Risk: The Contingent Role of Investors’ Screening and Firm’s Signaling Processes

2018 ◽  
Vol 82 (6) ◽  
pp. 71-88 ◽  
Author(s):  
Nikolaos G. Panagopoulos ◽  
Ryan Mullins ◽  
Panagiotis Avramidis
Keyword(s):  
Financial Reporting ◽  
Chief Executive Officers ◽  
Information Economics ◽  
Chief Executive ◽  
Idiosyncratic Risk ◽  
Sales Force ◽  
Data Set ◽  
Secondary Sources ◽  
Executive Officers ◽  
The Impact

Although sales force downsizing represents a challenging marketing resource change that can signal uncertainty about future firm performance, little is known about its impact on financial-market performance. Drawing from information economics, the authors address this knowledge gap by developing a comprehensive framework to (1) examine the impact of the size of a firm’s sales force downsizing on firm-idiosyncratic risk, (2) uncover investors’ screening processes that influence this relationship, and (3) identify firms’ mitigating signaling processes that can alleviate investor uncertainty linked to downsizing. The authors draw from several secondary sources to assemble a longitudinal data set of 314 U.S. public firms over 12 years and model their framework using a robust econometric approach. Findings show that larger sales force reductions are associated with greater firm-idiosyncratic risk. Furthermore, this increase in risk is amplified when firms face high levels of future competitive threats and lack transparency in financial reporting. However, chief executive officers can mitigate these deleterious moderating effects by signaling a commitment to growth (i.e., increasing advertising expenditures) and formally communicating an external strategic focus to Wall Street.

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