The Importance of Role-Specific Performance and Sociopolitical Factors for Chief Financial Officer Employment Outcomes

What is it about?

First, our study expands the executive turnover literature by focusing on the heterogeneous and distinct responsibilities of CFOs, who have fairly well-identified job responsibilities relative to other members of the top management team. Our empirical evidence lends strong support for the intuitive idea that performance metrics associated with the specific responsibilities of non-CEO executives are also important determinants of their continued employment. Second, our investigation of both economic and sociopolitical factors provides a more complete understanding of the determinants of non-CEO executive dismissal and promotion decisions. In looking beyond CFO performance metrics we seek to understand the impact of connections and influence in CFO employment decisions. Third, we demonstrate that CFOs are accountable for their specific financial reporting, financing, and regulatory duties, while forced CEO turnovers are only linked with incidences of financial reporting issues, which is a novel aspect of our research design.

Featured Image