مقاله انگلیسی رایگان در مورد تأثیر قدرت CEO و CFO بر مدیریت سود واقعی – اسپرینگر 2019

The purpose of this study is to further our understanding of the financial reporting implications of the CEO/CFO relationship by examining the influence of CEO power in the presence of CFO power on the financial reporting process. In so doing, we extend the prior literature in at least two ways. First, we provide evidence on the relationship between executive power (both CEO and CFO) and preferences for accrual earnings management (AEM), and real earnings management (REM). Second, we investigate whether CFO (CEO) power mitigates the influence of powerful CEOs (CFOs) in managing earnings (AEM or REM). Prior research suggests that CEOs and CFOs potentially have different preferences with respect to AEM and REM. CEOs are responsible for the strategic operations of the firm (i.e., current and future performance of the firm), while CFOs are ultimately responsible for the quality of financial reporting (Geiger and North 2006; Feng et al. 2011). Under the assumption that REM has negative consequences for the future performance of the firm (Bhojraj et al. 2009; Zang 2012), the presence of REM conflicts with the fiduciary responsibility of the CEO to the stakeholders of the firm. Similarly, assuming that AEM degrades the quality of financial reporting (Francis et al. 2008; Kim et al. 2012), the presence of AEM conflicts with the monitoring role of the CFO in the financial reporting process (Feng et al. 2011). Consistent with the above scenario, Graham et al.’s (2005, p. 36) survey evidence suggests that CFOs indicate a preference for REM over AEM in order to meet earnings targets. Further, Feng et al. (2011) find that when both the CEO and the CFO are charged in an SEC enforcement action, the CEO is significantly more likely to have been accused of orchestrating the AEM. In summary, this literature suggests that CEOs who have the ability to influence the earnings management process will rely on AEM, while CFOs who have the ability to influence the earnings management process will rely on REM. Our study extends prior literature by empirically investigating whether CEOs and CFOs have different earnings management technique preferences. While there is substantial evidence in the literature regarding the individual influence of both CEOs and CFOs over the financial reporting process (e.g., Geiger and North 2006; Jiang et al. 2010; Feng et al. 2011), how that influence is affected by the interplay between the two executives is not known. CFOs are the agent of CEOs (Graham and Harvey 2001), and a CEO has the power to replace a CFO who does not follow his/her preferences (Mian 2001; Fee and Hadlock 2004); thus, it may be the case that CEO preferences will dominate CFO preferences. However, power circulation theory challenges the notion that CEOs can indefinitely perpetuate their power (Ocasio 1994; Shen and Cannella 2002). Instead, the theory predicts that CEO power can be dissipated, in part due to contestation from other executives, who are viewed as rivals for the CEO’s position. In the specific context of financial reporting, asymmetric benefits and costs across executives could be factors as well. For example, the argument that CFOs bear higher potential litigation costs and reap fewer benefits from accounting manipulations than do CEOs (Mian 2001; Feng et al. 2011), suggests that this is likely a setting where CFOs will contest the CEO.