Paper Info
Title
Implied Tradeoffs Of Chief Financial Officer Accounting Expertise: Evidence From Firm-Manager Matching
Abstract
We present evidence that although individuals with accounting expertise bring key skills to the financial reporting responsibilities of the chief financial officer (CFO) position, they tend to lack educational and career experiences relevant to nonaccounting responsibilities (e.g., operations and strategy). Assuming boards' perceptions of CFO accounting expertise are correct on average, we provide evidence of tradeoffs of CFO accounting expertise by examining how differences in CFO backgrounds shape executive employment decisions. Firms with greater demand for nonaccounting expertise are less likely to hire an accounting expert CFO, consistent with ex ante firm-manager matching. Ex post, significant declines in firm-manager fit predict CFO turnover and other compensating changes in the composition of the senior management team. Accounting expert CFOs are also less likely to become chief executive officers, suggesting that CFO experience does not fully mitigate these tradeoffs. Collectively, the results suggest important tradeoffs inherent to CFO accounting expertise that shape the structure of the senior management team.
Year
DOI
Venue
2021
10.1287/mnsc.2020.3738
MANAGEMENT SCIENCE
Keywords
DocType
Volume
accounting, firm-manager matching, CFO appointment, CFO turnover, top management team
Journal
67
Issue
ISSN
Citations 
9
0025-1909
0
PageRank 
References 
Authors
0.34
0
4
Name
Order
Citations
PageRank
Darren Bernard100.34
WeiLi Ge200.68
Dawn Matsumoto300.34
Sara Toynbee400.34