Executive Accountants and the Reliability of Financial Reporting

• 成果类型: Article
• 署名作者: Rhodes, Adrienne; Russomanno, Dan
• 署名单位: University of Iowa; University of Arizona
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3697
• 发表日期: 2021
• 页码: 4475-4504
• 关键词: executive accountant; executive officer disclosures; chief accounting officer; controller; RESTATEMENTS; accrual quality; material weaknesses; governance

摘要

Using hand-collected data from mandatory disclosures of executive officers, we examine financial reporting outcomes associated with delegating significant accounting responsibilities to an executive accountant, not concurrently serving as the chief financial officer or chief executive officer. We find executive accountants are associated with a significant reduction in the likelihood of restatement. Moreover, we find evidence of a positive association between executive accountants and accrual quality and faster remediation of material weaknesses in internal control when an executive accountant is present. Taken together, this evidence is consistent with more reliable financial reporting at firms with an executive accountant. In contrast, accountants identified in commonly used datasets (i.e., Execucomp or BoardEx) are not consistently associated with the reliability of financial reporting. We highlight the significant differences between datasets, largely attributable to the objectives and sources of the underlying data. We conclude that Execucomp and BoardEx are not substitute datasets for the executive officers disclosed in firms' 10-K and proxy statement filings. Furthermore, we caution future research to consider which data are most appropriate in the context of each research question.