Impact of chief financial officer’s experience on the assurance of corporate social responsibility reports in China

Abstract

PurposeGiven the emerging importance of the chief financial officer’s (CFO) role, this study aims to probe into the prevalence of corporate social responsibility (CSR) assurance practices in China and to examine whether or not CFO foreign, professional or academic experience affects the likelihood of CSR assurance decision.Design/methodology/approachAll A-share listed Chinese companies during the year 2008–2017 with 5,144 firm-year observations have been investigated for this study.FindingsThis study finds a positive effect of CFO foreign and professional experience on CSR assurance. No significant association has been found between the CFO’s academic experience and CSR assurance. Additional analysis for Global Reporting Initiative (GRI) sampled firms shows that the academic and professional experience of CFOs has a significant positive association with CSR assurance. However, the main findings are replicated in the case of firms under mandatory CSR reporting.Research limitations/implicationsThe limitations of this study are its generalizability, unidimensional measure of CSR assurance which is unable to capture its quality and explore the other traits of CFOs.Practical implicationsIt provides assurance practitioners with valuable longitudinal data on China’s CSR reporting and assurance services. Also, firms should recognize the importance of having competent CFOs to improve the credibility of their CSR reporting. The cross-sectional variation analysis (GRI and mandatory CSR) will help firms to assess the value of each CFO attribute for their nonfinancial reporting and auditing choices while considering internal and external stakeholder demands.Originality/valueThis study not only updates the existing understanding of CSR assurance methods in China but also explains the significance of CFO-specific experience in enhancing the credibility of nonfinancial reporting.