CFO Outside Directorship and Financial Misstatements

Accounting Horizons, Forthcoming

37 Pages Posted: 27 Apr 2019

See all articles by Sarfraz Khan

Sarfraz Khan

University of Louisiana at Lafayette

Date Written: March 28, 2019


I study an important accounting consequence—financial misstatements—of CFO outside board membership. I find that firms with CFOs holding outside directorships have a lower likelihood of misstatements. These results likely reflect the benefits accruing to CFOs’ home firms in terms of improved financial reporting quality. These findings are based on several methods that control for unobserved factors that may affect both incidence of CFO outside directorships and a firm’s financial misstatements. I also provide some preliminary insights into CFO and home-firm characteristics that determine CFO outside board directorships. My findings are consistent with the inter-organizational embeddedness perspective, suggesting that inter-firm networks provide sources for counseling and learning opportunities, which executives can use to improve their home firms’ performance.

Keywords: CFO; outside directorship; financial misstatements; diffusion of knowledge

JEL Classification: M41

Suggested Citation

Khan, Sarfraz, CFO Outside Directorship and Financial Misstatements (March 28, 2019). Accounting Horizons, Forthcoming, Available at SSRN:

Sarfraz Khan (Contact Author)

University of Louisiana at Lafayette ( email )

Department of Accounting
214 Hebrard Blvd.
Lafayette, LA 70508
United States

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