The Importance of Role-Specific Performance and Sociopolitical Factors for Chief Financial Officer Employment Outcomes

45 Pages Posted: 23 Oct 2013 Last revised: 2 Aug 2018

See all articles by Ellen Engel

Ellen Engel

University of Illinois at Chicago - College of Business Administration

Feng Gao

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Xue Wang

Ohio State University - Fisher College of Business

Date Written: July 15, 2018

Abstract

This paper investigates the importance of role-specific performance measures and sociopolitical factors in the career paths of CFOs. We find that forced CFO turnover is associated with poor performance in functions over which they have more direct influence, including financial reporting, financing, and regulatory compliance. We also find that CFOs are less likely to be dismissed when they have greater connectedness with the CEO and have stronger influence within the firm. Interestingly, sociopolitical factors are linked with promotion outcomes, but economic performance does not appear to play a significant role. The collective evidence indicates that both economic and sociopolitical factors have an important role in influencing CFO career paths.

Keywords: Executive turnover, CFO performance, sociopolitical factors, social connections, CFO power

Suggested Citation

Engel, Ellen and Gao, Feng and Wang, Xue, The Importance of Role-Specific Performance and Sociopolitical Factors for Chief Financial Officer Employment Outcomes (July 15, 2018). Fisher College of Business Working Paper No. RP 2014-02-005. Available at SSRN: https://ssrn.com/abstract=2343898 or http://dx.doi.org/10.2139/ssrn.2343898

Ellen Engel (Contact Author)

University of Illinois at Chicago - College of Business Administration ( email )

601 South Morgan Street
11th Floor
Chicago, IL 60607
United States
312-413-3418 (Phone)

Feng Gao

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States

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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