Do CFOs Have Styles of Their Own? An Empirical Investigation of the Effect of Individual CFOs on Financial Reporting Practices
University of Washington - Michael G. Foster School of Business
Dawn A. Matsumoto
University of Washington - Department of Accounting
Jenny Li Zhang
University of British Columbia - Sauder School of Business
September 28, 2008
AAA 2009 Financial Accounting and Reporting Section (FARS) Paper
This paper examines the effect of Chief Financial Officers’ (CFOs’) individual philosophy or “style” on corporate accounting choices. We track 359 CFOs across different firms over time and investigate whether CFO-specific factors explain a firm’s accounting choices. We find that, across a wide range of accounting choices, individual CFOs are an important determinant of accounting practices. Moreover, the effect of CFO styles appears to be stronger under conditions of high CFO discretion and high CFO job demands. We also trace the CFO style to observable CFO characteristics by examining whether CFOs’ gender, age, and educational background affect their styles. We find limited evidence of the impact of these CFO characteristics on accounting choices, suggesting that these common and observable characteristics capture only a small portion of CFO styles.
Number of Pages in PDF File: 59
Keywords: Chief Financial Officer, Managerial Style, Management Turnover, Accounting Choice
JEL Classification: M41, M44, G34
Date posted: September 11, 2008 ; Last revised: October 27, 2010
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