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

August 2014


Abstract:     
We examine 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, receipt of SEC comment letters, and late regulatory filings; (2) CFO successions following forced turnover are associated with subsequent improvements in these financial outcomes. Collectively, our empirical evidence is consistent with the notion that board monitoring of CFOs is effective in holding CFOs accountable for their specific financial reporting and regulatory duties and in choosing successor CFOs that are equipped to address failures in financial practices and outcomes.

Number of Pages in PDF File: 44

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

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Date posted: October 23, 2013 ; Last revised: September 3, 2014

Suggested Citation

Engel, Ellen and Gao, Feng and Wang, Xue, Chief Financial Officer Succession and Corporate Financial Practices (August 2014). 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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