Affiliation:
1. College of Management University of Massachusetts Boston Boston Massachusetts USA
2. College of Global Business Korea University Sejong South Korea
Abstract
AbstractWe study the role and influence of Chief Accounting Officers (CAOs) by examining the relation between the presence of a CAO on the top management team and asymmetric timely loss recognition (ATLR). Using large‐sample data from 10‐Ks and proxy statements of S&P 1500 firms, we find that the presence of a CAO is positively associated with the level of ATLR and that this positive relation is more pronounced when the Chief Financial Officer (CFO) does not have an accounting background. Our difference‐in‐differences analysis further indicates that the level of ATLR increases significantly following the initial appointments of CAOs. The results are robust to propensity score matching, alternative ATLR models, and various control variables. Collectively, our findings suggest that adding an accounting chief to the C‐suite has a significant impact on financial reporting practices.