CFO Social Ties to Non-CEO Senior Managers and Financial Restatements

Accounting and Business Research, Forthcoming

50 Pages Posted: 7 Nov 2020

See all articles by Yu Flora Kuang

Yu Flora Kuang

The University of Melbourne

Xiaotao Kelvin Liu

Northeastern University - Accounting Group

Srikanth Paruchuri

Pennsylvania State University, Mary Jean and Frank P. Smeal College of Business Administration, Students

Bo Qin

The University of Melbourne

Date Written: June 19, 2020

Abstract

In this study, we examine how a CFO’s social ties with non-CEO senior managers in the same firm affect the likelihood of financial restatements. We categorize social ties as either professional or personal, and find that the two types of ties have distinct effects. Our findings show that CFOs’ professional ties with senior managers are associated with a lower likelihood of financial restatements. Interestingly, the effects of CFO personal ties are related to a firm’s operational performance, in that such ties are associated with a higher (lower) likelihood of financial restatements when operational performance is poor (good). Overall, our findings are consistent with the notion that CFO social ties with senior managers may give rise to both information sharing and arm-in-arm behavior.

Keywords: CFO, Social Ties, Financial Restatements, Financial Reporting Quality

JEL Classification: M40, M41

Suggested Citation

Kuang, Yu and Liu, Xiaotao Kelvin and Paruchuri, Srikanth and Qin, Bo, CFO Social Ties to Non-CEO Senior Managers and Financial Restatements (June 19, 2020). Accounting and Business Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3631562 or http://dx.doi.org/10.2139/ssrn.3631562

Yu Kuang

The University of Melbourne ( email )

Level 7, Department of Accounting
the Spot, 198 Berkeley St
Carlton, Victoria VIC 3053
Australia

Xiaotao Kelvin Liu

Northeastern University - Accounting Group ( email )

404B Hayden Hall
360 Huntington Avenue
Boston, MA 02115
United States
617-373-5926 (Phone)

Srikanth Paruchuri

Pennsylvania State University, Mary Jean and Frank P. Smeal College of Business Administration, Students ( email )

University Park, PA
United States

Bo Qin (Contact Author)

The University of Melbourne ( email )

Level 7, Department of Accounting
The Spot, 198 Berkeley St.
Carlton, Victoria VIC 3053
Australia
+61383449361 (Phone)

HOME PAGE: http://www.findanexpert.unimelb.edu.au/display/person743093#tab-overview

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
18
Abstract Views
180
PlumX Metrics