Do CFO Outside Directorships Benefit or Harm Home Firm Financial Reporting Quality?

Accounting Horizons, forthcoming

38 Pages Posted: 18 Sep 2017 Last revised: 30 Mar 2023

See all articles by Lauren M. Cunningham

Lauren M. Cunningham

University of Tennessee - Haslam College of Business

Linda A. Myers

University of Tennessee, Haslam College of Business, Accounting and Information Management

Justin Short

University of Tennessee - Haslam College of Business

Date Written: February 2023

Abstract

Demand for chief financial officer (CFO) service on corporate boards has grown substantially in recent years, leading to questions about how outside board appointments affect a CFO’s ability to fulfill their home firm responsibilities. In this paper, we focus on the CFO’s core responsibility of overseeing home firm financial reporting quality and we explore the types of situations where outside board service may lead to either learning opportunities or pressure to shirk on home firm duties. Our results should interest investors, auditors, and board members considering the implications of CFO outside board service because although we observe no negative impacts on home firm financial reporting quality arising from outside board service, we find only limited situations where significant benefits accrue.

Keywords: Outside Directorships, Financial Reporting Practices, Financial Reporting Quality, Financial Statement Misstatements, Material Weaknesses in Internal Controls, Management Earnings Forecasts, Chief Financial Officers, Boards of Directors, Audit Committees

JEL Classification: G34, M40, M41

Suggested Citation

Cunningham, Lauren M. and Myers, Linda A. and Short, Justin, Do CFO Outside Directorships Benefit or Harm Home Firm Financial Reporting Quality? (February 2023). Accounting Horizons, forthcoming, Available at SSRN: https://ssrn.com/abstract=3036958 or http://dx.doi.org/10.2139/ssrn.3036958

Lauren M. Cunningham

University of Tennessee - Haslam College of Business ( email )

Accounting and Information Management
603 Stokely Management Center
Knoxville, TN 37996
United States

Linda A. Myers (Contact Author)

University of Tennessee, Haslam College of Business, Accounting and Information Management ( email )

Knoxville, TN
United States

Justin Short

University of Tennessee - Haslam College of Business ( email )

453 Haslam Business Building
Knoxville, TN 37996-4140
United States

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