Work

Asset impairments surrounding chief financial officer turnover

Year: 2024

Type: article

Abstract: We examine the effect of chief financial officer (CFO) turnover on the likelihood and size of asset impairments. Using Australian data, we find evidence consistent with incoming CFOs recording larger asset impairments, particularly when they are external hires with prior listed experience, or receive equity-based compensation. Our results also indicate that outgoing CFOs report higher profits in the year prior to their departure by reporting fewer and smaller asset impairments. This effect is larger when outgoing CFOs move to another listed firm or receive equity-based compensation, consistent with reputational and compensation incentives to maximise earnings. Overall, our results provide evidence of the independent influence CFOs have on financial reporting. JEL Classification: M41, G34, M40

Source: Australian Journal of Management

DOI: 10.1177/03128962241270757

Authors: Martin Bugeja, Michelle Spiller, Helen Spiropoulos, Peter Wells

Institution: University of Technology Sydney

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,700

Funders: University of Technology Sydney, Curtin University of Technology