Managerial attributes and accounting and financial policies
This research consists of two essays that examine the impact of managerial attributes on a firm's accounting and financial practices. Essay 1 documents the relationship between Chief Executive Officer (CEO) and Chief Financial Officer (CFO) power, and earnings management decisions. My investigation reveals that the use of specific earnings mechanism, such as accruals and real activities management, is inversely related to its cost. Further, I do not find any consistent evidence to support that the relative power of CEOs and CFOs interacts with the costs of these earnings management mechanism to determine the specific components used in the earnings management mix.
In second essay, I examine whether the quality of earnings and financial policies of a firm improves when its CFO serves on another company's board of directors. Consistent with my hypotheses, I find that firms with their CFOs on outside boards are associated with better accruals quality, lower likelihood of restatements, more persistent earnings, and greater financial flexibility, as reflected in faster adjustment toward target debt ratios and lower sensitivity between cash holdings and cash flow shocks. These findings are based on several methods that control for unobserved factors that may affect both incidence of CFO outside directorship and a firm's accounting and financial policies.