No. 48: Who matters more? The roles of CEOs and CFOs in financial misreporting

Jahr: 2023
Typ: Working Paper
Open Science:

Abstract

This study examines CEO and CFO effects on firms’ financial misreporting. Leveraging the concept of “manager style”, we compare the incremental effects of CEOs and CFOs on financial misreporting after controlling for known determinants and an extensive set of fixed effects. Specifically, we construct a manager-firm matched panel dataset that tracks individual CEOs and CFOs across firms over the period 1995-2016. We then combine three different methods to identify style effects—the manager mobility method, the connectedness method, and the spell method. While both top-level executives significantly affect their firms’ financial misreporting, we find that the impact of CFOs is economically larger than that of CEOs. This greater eco-nomic impact of CFOs is particularly pronounced for fraudulent misreporting. These findings remain consistent across different samples, methods, misreporting measures, and specification choices for the underlying conceptual mechanism. Thus, our study highlights the important role of the CFO as a key player in the beyond-GAAP setting.

Beteiligte Institutionen

Die Hauptstandorte vom TRR 266 sind die Universität Paderborn (Sprecherhochschule), die HU Berlin und die Universität Mannheim. Alle drei Standorte sind seit vielen Jahren Zentren für Rechnungswesen- und Steuerforschung. Hinzu kommen Wissenschaftler der LMU München, der Frankfurt School of Finance and Management, der Goethe-Universität Frankfurt, der Universität zu Köln und der Leibniz Universität Hannover, die die gleiche Forschungsagenda verfolgen.

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