The Effect of CEO Social Influence Pressure and CFO Accounting Experience on CFO Financial Reporting Decisions
Department
School of Accountancy
Document Type
Article
Publication Date
2-2017
Embargo Period
7-18-2018
Abstract
The purpose of this study is to test the effects of inappropriate CEO social influence pressure and CFO accounting experience on CFOs' reporting judgments and decisions. Specifically, we use a sample of 69 highly experienced public company CFOs to evaluate the extent that inappropriate compliance or obedience pressure from the CEO to revise financial reporting to meet an earnings target affects CFO revision decisions. The results indicate that compliance pressure (a request) and obedience pressure (an order) from the CEO significantly (and similarly) increase CFO willingness to revise their initial inventory adjustments. Although both types of pressure from CEOs impact CFOs' financial reporting decisions, compliance pressure did not create increased levels of perceived pressure. The results also reveal an inverse relation between CFO accounting experience and revision of the initial estimate. Finally, CFOs who acquiesce to CEO pressure maintain their personal responsibility for the adjustment, contrary to obedience theory, but consistent with the intent of SOX Section 302 certification requirements.
Journal Title
Auditing: A Journal of Practice and Theory
Journal ISSN
0278-0380
Volume
36
Issue
1
First Page
21
Last Page
41
Digital Object Identifier (DOI)
10.2308/ajpt-51507