Financial Executive Qualifications, Financial Executive Turnover, and Adverse SOX 404 Opinions
46 Pages Posted: 24 Jan 2007 Last revised: 23 Jan 2010
Date Written: January 19, 2010
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: Suggested Citation