Financial Executive Qualifications, Financial Executive Turnover, and Adverse SOX 404 Opinions
University of Pittsburgh
University of North Texas - Accounting Department
University of Kansas - School of Business
January 19, 2010
Journal of Accounting & Economics (JAE), Forthcoming
This study attempts to provide a comprehensive understanding of the interrelationships among chief financial officers’ (CFOs’) professional qualifications, SOX Section 404 internal control weakness, CFOs’ turnover, CFOs’ qualification improvement, and remediation of material weaknesses. We find that firms receiving initial adverse SOX 404 opinions for 2004 have less qualified CFOs. Adverse SOX 404 opinion recipients experience more CFO turnover in 2005, and these firms are more likely to hire CFOs having improved qualifications. Results show that simply hiring a new CFO is not associated with SOX 404 opinion improvement. Opinion improvement requires hiring a better qualified CFO.
Number of Pages in PDF File: 46
Keywords: CFO Turnover, Professional Qualifications, Internal Contro, SOX 404
JEL Classification: M40, M51Accepted Paper Series
Date posted: January 24, 2007 ; Last revised: January 23, 2010
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