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
Date Written: February 2023
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: Suggested Citation