The independent influence of CFOs on firms' financial reporting

Spiller, Michelle Ann

The independent influence of CFOs on firms' financial reporting

Spiller, Michelle Ann

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Publication Type:: Thesis
Issue Date:: 2019

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Field	Value	Language
dc.contributor.author	Spiller, Michelle Ann
dc.date.accessioned	2019-12-02T03:01:51Z
dc.date.available	2019-12-02T03:01:51Z
dc.date.issued	2019
dc.identifier.uri	http://hdl.handle.net/10453/137101
dc.description	University of Technology Sydney. Faculty of Business.	en_AU
dc.description.abstract	This thesis provides evidence on two research questions regarding the independent influence of CFOs on firms’ financial reporting. Chapter 2 examines the effect of relative CFO power on financial reporting integrity and Chapter 3 investigates changes in financial reporting integrity surrounding routine versus non-routine CFO turnover. The primary proxy for financial reporting integrity is the recognition of non-current asset impairments in response to indicators of impairment which remains a key focus area of regulatory scrutiny and inquiry. Based on a sample of 1,781 Australian firm-years over the period 2007 to 2015, the evidence in Chapter 2 illustrates that firms record less timely non-current asset impairments (in the presence of adverse economic circumstances and worsening financial performance) as the degree of relative CFO power increases. 463 Australian CFO changes between 1 July 2007 and 30 June 2015 are examined in Chapter 3 which finds that new CFOs use asset write-offs as a vehicle to engage in ‘big bath’ accounting in the year of a non-routine appointment. The results in Chapter 3 also indicate that (irrespective of the nature of the CFO change) CFOs bias earnings upward in the period prior to their departure. The results are consistent with respect to a number of sensitivity tests and alternative proxies for financial reporting integrity. While CFOs, therefore, have the capacity to exert independent influence over firms’ reported results the balance of findings suggest that CFOs act in self-interest. In other words, CFOs’ financial reporting decisions are opportunistically motivated by their own compensation and career incentives and the personal costs they face. The evidence in this thesis is, therefore, contrary to the view that CEO pressure is a primary driver of CFOs’ involvement in earnings manipulation.	en_AU
dc.format	Thesis (PhD)
dc.language.iso	en_AU	en_AU
dc.relation	https://opus.lib.uts.edu.au/bitstream/10453/137101/2/02whole.pdf
dc.rights	info:eu-repo/semantics/openAccess
dc.rights	The author owns the copyright in this thesis including all reproduction and reuse rights for the work. The work may not be altered without the permission of the copyright owner. Attribution is essential when quoting or paraphrasing from this thesis.
dc.rights	au.edu.uts.lib/ppc
dc.subject	chief financial officer
dc.subject	influence
dc.subject	firm
dc.subject	Australia
dc.subject	financial statement
dc.subject	financial accounting
dc.subject	financial reporting
dc.subject	impairment
dc.subject	non-current asset
dc.subject	fixed asset
dc.subject	write-off
dc.subject	earnings
dc.title	The independent influence of CFOs on firms' financial reporting	en_AU
dc.type	Thesis	en_AU
utslib.copyright.status	open_access

Abstract:

This thesis provides evidence on two research questions regarding the independent influence of CFOs on firms’ financial reporting. Chapter 2 examines the effect of relative CFO power on financial reporting integrity and Chapter 3 investigates changes in financial reporting integrity surrounding routine versus non-routine CFO turnover. The primary proxy for financial reporting integrity is the recognition of non-current asset impairments in response to indicators of impairment which remains a key focus area of regulatory scrutiny and inquiry. Based on a sample of 1,781 Australian firm-years over the period 2007 to 2015, the evidence in Chapter 2 illustrates that firms record less timely non-current asset impairments (in the presence of adverse economic circumstances and worsening financial performance) as the degree of relative CFO power increases. 463 Australian CFO changes between 1 July 2007 and 30 June 2015 are examined in Chapter 3 which finds that new CFOs use asset write-offs as a vehicle to engage in ‘big bath’ accounting in the year of a non-routine appointment. The results in Chapter 3 also indicate that (irrespective of the nature of the CFO change) CFOs bias earnings upward in the period prior to their departure. The results are consistent with respect to a number of sensitivity tests and alternative proxies for financial reporting integrity. While CFOs, therefore, have the capacity to exert independent influence over firms’ reported results the balance of findings suggest that CFOs act in self-interest. In other words, CFOs’ financial reporting decisions are opportunistically motivated by their own compensation and career incentives and the personal costs they face. The evidence in this thesis is, therefore, contrary to the view that CEO pressure is a primary driver of CFOs’ involvement in earnings manipulation.

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http://hdl.handle.net/10453/137101