CFO Gender and Financial Statement Irregularities

Forthcoming, Academy of Management Journal

58 Pages Posted: 6 Jun 2019

See all articles by Vishal K. Gupta

Vishal K. Gupta

University of Alabama - Department of Management

Sandra Mortal

University of Alabama - Culverhouse College of Commerce & Business Administration

Bidisha Chakrabarty

Saint Louis University - Richard A. Chaifetz School of Business

Xiaohu Guo

University of Alabama

Daniel B. Turban

University of Missouri - Department of Management

Date Written: May 14, 2019

Abstract

The increasing presence of women in upper echelon positions draws attention to the possible effects of executive gender on corporate decisions and actions. In this study, we formulate theory about the impact of CFO gender on financial misreporting to generate two key insights. First, we hypothesize that firms with female CFOs will have a lower likelihood of financial misreporting than comparable firms with male CFOs. Second, we argue that the relation between CFO gender and financial misreporting will be contingent on governance mechanisms (e.g., institutional ownership and analyst coverage) such that misreporting of firms with male CFOs will differ more from that of firms with female CFOs when governance is weak. Our results, based on a novel leading indicator of the likelihood of financial misreporting, provide support for our predictions. Various alternative econometric specifications, including (but not limited to) exogenous shocks, propensity score matching, and modeling treatment-effects, random effects, firm-fixed effects, and hybrid effects provide general support for our theory and hypotheses. Implications and directions for future research are discussed.

Keywords: Executive Gender, Upper Echelon, Female, Corporate Governance, CFO, Financial Misreporting

JEL Classification: J16, J30, J70, J71, J81

Suggested Citation

Gupta, Vishal K. and Mortal, Sandra and Chakrabarty, Bidisha and Guo, Xiaohu and Turban, Daniel B., CFO Gender and Financial Statement Irregularities (May 14, 2019). Forthcoming, Academy of Management Journal. Available at SSRN: https://ssrn.com/abstract=3387813 or http://dx.doi.org/10.2139/ssrn.3387813

Vishal K. Gupta

University of Alabama - Department of Management ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

Sandra Mortal

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States

Bidisha Chakrabarty

Saint Louis University - Richard A. Chaifetz School of Business ( email )

3674 Lindell Blvd
St. Louis, MO MO 63108-3397
United States
3149773607 (Phone)
3149771479 (Fax)

HOME PAGE: http://business.slu.edu/departments/finance/faculty-staff/bidisha-chakrabarty

Xiaohu Guo (Contact Author)

University of Alabama ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

Daniel B. Turban

University of Missouri - Department of Management ( email )

United States

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