Beyond the CFO and Accrual Decisions: An Examination of Individual Audit Committee Chairs, CEOS, and CFOs and Their Influence on Reporting and Operating Decisions

Abstract

We examine whether managers besides the CFO have 'styles' that affect firms’ reporting and operating decisions. Following recent studies, we develop a dataset of individual audit committee chairs, CEOs, and CFOs, that tracks their movements across firms and over time. Although audit committee chairs serve a monitoring role, research suggests that each of these management groups could exert their individual 'styles' on firms’ reporting and operating decisions. We find that each of these groups significantly affect firms’ accrual- and real activities-based decisions, even when controlling for the effect of the other groups. Also, we find the influence of these individuals is not impacted by their managerial discretion or job demands. Last, we provide evidence that certain observable demographic measures explain some of the managers’ decisions. These results add to the literature because they suggest that managers besides the CFO can significantly influence reporting and operating decisions, and the influence of these managers extends beyond accounting-based techniques to include non-accounting-based decisions.