CFO's accounting talent, compensation and turnover

Authors


  • We would like to thank E. Bartov, M. Bugeja, D. Dhaliwal, P. Easton, F. Franco, J. Francis, V. Richardson, J. Weber and participants of the 2010 AFAANZ Conference in Christchurch, the AAA Conference in San Francisco, the University of Technology, Sydney, and Wirtschafts Universitat for their helpful comments.

Abstract

This paper builds on and contributes to the literature on Chief Financial Officer's (CFO) compensation and turnover. We contend that the accounting talent of CFOs can be measured by accounting errors that occur when CFOs implement accounting standards. We find (i) a positive association between the CFO's accounting talent and the CFO's compensation ex ante in the transition year; (ii) a positive association between the CFO's accounting talent and the CFO's bonus in the subsequent year (adoption year); and (iii) an inverse association between the CFO's accounting talent and CFO turnover in the subsequent year (adoption year).

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