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| Author: | Feng, M.(et al.) |
| Title: | Why do CFOs become involved in material accounting manipulations? |
| Journal: | Journal of Accounting & Economics
2011 : FEB, VOL. 51: 1-2, p. 21-36 |
| Index terms: | earnings turnover power incentives compensation financial control |
| Freeterms: | quality manipulation CFOs CEOs |
| Language: | eng |
| Abstract: | This article examines why Chief financial officers (CFOs) become involved in material accounting manipulations. It is argues that while CFOs bear substantial legal costs when involved in accounting manipulations, these CFOs have similar equity incentives to the CFOs of matched non-manipulation firms. In contrast, Chief executive officers (CEOs) of manipulation firms have higher equity incentives and more power than CEOs of matched firms. It is found that CFOs are involved in material accounting manipulations because they succumb to pressure from CEOs, rather than because they seek immediate personal financial benefit from their equity incentives. Accounting and Auditing Enforcement Releases' (AAER) content analysis reinforces this conclusion. |
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