CFO Turnover Drivers and Consequences Research: Time to Move Beyond Wrongdoing?

Abstract

Interest in CFO turnover has resulted in a growing body of multidisciplinary but often disparate research. We provide an integrative review of all quantitative CFO turnover research in the Financial Times 50 journals. We find the field focused on, and documenting, a positive relationship between financial misrepresentation and CFO turnover, with CFOs leaving firms prior to or after wrongdoing revelations. Small study samples suggest wrongdoing instances are limited. The evidence also suggests CFOs may be at times scapegoats or under the undue influence of CEOs. Nonetheless, CFOs still bear negative career consequences from their firms’ financial misrepresentation. Conclusions on the state of governance are more complex. Post-wrongdoing turnover rates although higher than control groups are not very high, suggesting the CFOs may not be involved or governance is still lax in those limited numbers of firms engaging in wrongdoing. Major research gaps still exist though. Unlike broader research on executive succession and turnover, limited attention has been paid to the relationships between firm performance and CFO turnover, and post-succession research remains nascent. More attention is needed to better understand drivers of voluntary turnover, and the links to CFO intellectual capital as well as firm strategic choices and consequences beyond wrongdoing.