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Do accountants make better chief financial officers?

Author

Listed:
  • Hoitash, Rani
  • Hoitash, Udi
  • Kurt, Ahmet C.

Abstract

We examine whether chief financial officers (CFOs) with accounting backgrounds (accountant CFOs) are associated with more conservative corporate outcomes. We find that, in high-growth industries, firms with accountant CFOs invest less in research and development and capital expenditures and are less likely to engage in external financing. In low-growth industries, we find that firms with accountant CFOs exhibit greater cost efficiency. Our results are consistent with risk aversion on the part of accountant CFOs. We further document that accountant CFOs are negatively associated with firm value in high-growth industries and positively associated with firm value in low-growth industries.

Suggested Citation

  • Hoitash, Rani & Hoitash, Udi & Kurt, Ahmet C., 2016. "Do accountants make better chief financial officers?," Journal of Accounting and Economics, Elsevier, vol. 61(2), pages 414-432.
    • Handle: RePEc:eee:jaecon:v:61:y:2016:i:2:p:414-432
    DOI: 10.1016/j.jacceco.2016.03.002
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    More about this item

    Keywords

    Chief financial officer; Accounting background; Risk aversion; Cost control; Investment; Financing activity; Firm value;
    All these keywords.

    JEL classification:

    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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