Abstract

http://ssrn.com/abstract=2343898
 


 



Chief Financial Officer Succession and Corporate Financial Practices


Ellen Engel


University of Chicago Booth School of Business

Feng Gao


University of Illinois at Chicago

Xue Wang


Ohio State University - Fisher College of Business

June 1, 2015

Fisher College of Business Working Paper No. RP 2014-02-005

Abstract:     
We examine the determinants and performance consequences of Chief Financial Officer (CFO) successions in years 2002-2008. We argue that if internal monitoring mechanisms are effective, forced CFO departures are more likely in firms with poor financial practices, followed by improvements in these financial practices. We find that (1) the probability of forced CFO turnover is associated with incidences of accounting restatements, internal control weaknesses, relatively severe financial constraints, receipt of SEC comment letters, and late regulatory filings; (2) CFO successions following forced turnover are associated with subsequent improvements in these financial outcomes. Several of these findings are specific to CFO turnover and succession and not to CEO turnover and succession, suggesting that CFOs are responsible for the outcomes of financial activities in which they have more direct influence and that successor CFOs have a direct impact on the subsequent financial outcomes.

Number of Pages in PDF File: 46

Keywords: CFO succession, CFO turnover, Board of director monitoring


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Date posted: October 23, 2013 ; Last revised: June 4, 2015

Suggested Citation

Engel, Ellen and Gao, Feng and Wang, Xue, Chief Financial Officer Succession and Corporate Financial Practices (June 1, 2015). Fisher College of Business Working Paper No. RP 2014-02-005. Available at SSRN: http://ssrn.com/abstract=2343898 or http://dx.doi.org/10.2139/ssrn.2343898

Contact Information

Ellen Engel (Contact Author)
University of Chicago Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-0966 (Phone)
866-377-52152 (Fax)
Feng Gao
University of Illinois at Chicago ( email )
Accounting Department
Chicago, IL 60305
Xue Wang
Ohio State University - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-688-1330 (Phone)
614-292-2118 (Fax)
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