Financial Executive Qualifications, Financial Executive Turnover, and Adverse SOX 404 Opinions

46 Pages Posted: 24 Jan 2007 Last revised: 23 Jan 2010

See all articles by Chan Li

Chan Li

University of Kansas

Lili Sun

University of North Texas - Department of Accounting

Michael Ettredge

University of Kansas - Accounting and Information Systems Area

Date Written: January 19, 2010

Abstract

This study attempts to provide a comprehensive understanding of the interrelationships among chief financial officers’ (CFOs’) professional qualifications, SOX Section 404 internal control weakness, CFOs’ turnover, CFOs’ qualification improvement, and remediation of material weaknesses. We find that firms receiving initial adverse SOX 404 opinions for 2004 have less qualified CFOs. Adverse SOX 404 opinion recipients experience more CFO turnover in 2005, and these firms are more likely to hire CFOs having improved qualifications. Results show that simply hiring a new CFO is not associated with SOX 404 opinion improvement. Opinion improvement requires hiring a better qualified CFO.

Keywords: CFO Turnover, Professional Qualifications, Internal Contro, SOX 404

JEL Classification: M40, M51

Suggested Citation

Li, Chan and Sun, Lili and Ettredge, Michael L., Financial Executive Qualifications, Financial Executive Turnover, and Adverse SOX 404 Opinions (January 19, 2010). Journal of Accounting & Economics (JAE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=959215

Chan Li

University of Kansas ( email )

Capitol Federal Hall
Lawrence, KS 66045
United States
7857661277 (Phone)
66045 (Fax)

Lili Sun

University of North Texas - Department of Accounting ( email )

1155 Union Circle #305219
Denton, TX 76203-5017
United States
940-565-3077 (Phone)

Michael L. Ettredge (Contact Author)

University of Kansas - Accounting and Information Systems Area ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States
785-864-7537 (Phone)
785-864-5328 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
965
Abstract Views
4,251
rank
23,005
PlumX Metrics