The Impact of Internal Control Quality on CFO Turnover

  • Ya-Fang Wang Department of Accounting, Providence University
  • Yu-Ting Huang Ph. D. Program in Business, Chung Yuan Christian University

Abstract

Accurate financial reports are crucial for regulators, auditors, and investors to understand the condition of a company. CFO turnover and internal financial controls play a large role in determining the quality of financial reporting. We investigated the association between CFO turnover and internal controls and found that companies with deficient internal controls are more likely to terminate their CFOs following financial restatements. Companies with deficient internal controls are also likely to have lower earnings quality. In this study, we further investigated how companies experiencing CFO turnover with weak internal controls can subsequently change controls to impact earnings quality.

Author Biographies

Ya-Fang Wang, Department of Accounting, Providence University
Yu-Ting Huang, Ph. D. Program in Business, Chung Yuan Christian University
Published
2013-05-15
Section
Research Articles