School of Accountancy Faculty Publications and Presentations
Chief Financial Officer Turnover, Sarbanes–Oxley, and Market Reactions
Document Type
Article
Publication Date
3-2023
Abstract
We argue that forced CFO turnover has a complex relation with SOX reports of internal control problems. Sometimes forced turnover precedes an adverse SOX report whereas, in other cases, forced turnover follows the unfavorable SOX opinion. Further, financial markets are aware of this complex relation. Using a large sample collected over eight years, we find evidence to support our arguments. Regarding market reactions, we find that upon the announcement of CFO turnover, cumulative abnormal returns (CAR) are negative and significant for forced resignations. This reaction is mitigated if an unfavorable SOX opinion had been issued for the prior year. We also find that negative market reactions to adverse SOX reports are attenuated, in part, by whether the company previously forced the CFO to leave.
Recommended Citation
Parker, R.J., Yan, Y.C., Dao, M. and Manry, D., 2023. Chief Financial Officer Turnover, Sarbanes–Oxley, and Market Reactions. Review of Pacific Basin Financial Markets and Policies, 26(01), p.2350004. https://doi.org/10.1142/S0219091523500042
Publication Title
Review of Pacific Basin Financial Markets and Policies
DOI
https://doi.org/10.1142/S0219091523500042
Comments
Free access.
© World Scientific Publishing Co. and Center for Pacific Basin Business, Economics and Finance Research