Author ORCID Identifier

https://orcid.org/0000-0003-2929-4797

Year of Publication

2018

Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation

College

Business and Economics

Department

Accounting

First Advisor

Dr. Dave Ziebart

Abstract

In this study, I examine whether firms hire new CFOs with improved qualifications following a financial reporting failure and subsequently experiencing CFO turnover. Prior literature provides evidence that restating firms attempt to take remedial actions to restore their credibility and reputation. This study extends prior literature by testing whether the decision to hire a new CFO is a valued remedial action for restating firms.

The empirical results show that restating firms are more likely to hire new CFOs with more accounting expertise and from external sources than non-restating firms are. The market reacts more favorably when restating firms hire a CFO with more relevant accounting expertise than the incumbent CFO. I also find that the improved qualifications of the new CFO mitigate the information risk generated by the restatement.

This study contributes to the literature with the assertion that accounting expertise is a valuable attribute that firms consider when making hiring decisions for CFOs, especially those firms that issued a restatement. The results imply that replacing CFOs is a valued remedial action for restating firms. The improved qualifications of the new CFOs improve the information environment for restating firms and reduce perceived risk from investors.

Digital Object Identifier (DOI)

https://doi.org/10.13023/etd.2018.389

Available for download on Friday, October 16, 2020

Included in

Accounting Commons

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