Robert M. Bowen, S. Jane Jollineau, Sarah C. Lyon, Shavin Malhotra, Pengcheng Zhu
{"title":"CEO–CFO Compatibility and Audit Risk","authors":"Robert M. Bowen, S. Jane Jollineau, Sarah C. Lyon, Shavin Malhotra, Pengcheng Zhu","doi":"10.1111/1467-8551.12887","DOIUrl":null,"url":null,"abstract":"<p>This study examines the influence of CEO–CFO compatibility (proxied by the similarity of their personalities) on audit risk (proxied by audit fees). Relying on similarity-attraction theory, we posit that alignment between the CEO's and CFO's personalities − specifically their ‘Big Five’ traits − enhances internal communication, information sharing and decision-making processes within the organization. This alignment, in turn, reduces audit risk associated with the firm's financial reporting. We test our theory using firm fixed effects and find that greater CEO–CFO personality similarity is associated with reduced audit fees. Further, we find that the tenure of the CEO–CFO relationship partially explains the relation between their personality similarity and audit fees. Finally, we find that the effect of CEO–CFO personality similarity on audit fees is stronger when corporate governance allows greater managerial autonomy, that is, CEO–CFO compatibility is more important for reducing audit risk when corporate governance is weak. Our results are robust after controlling for many other characteristics of the CEO and CFO and potential endogeneity related to CEO turnover.</p>","PeriodicalId":48342,"journal":{"name":"British Journal of Management","volume":"36 3","pages":"1070-1090"},"PeriodicalIF":4.5000,"publicationDate":"2024-12-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"British Journal of Management","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/1467-8551.12887","RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
This study examines the influence of CEO–CFO compatibility (proxied by the similarity of their personalities) on audit risk (proxied by audit fees). Relying on similarity-attraction theory, we posit that alignment between the CEO's and CFO's personalities − specifically their ‘Big Five’ traits − enhances internal communication, information sharing and decision-making processes within the organization. This alignment, in turn, reduces audit risk associated with the firm's financial reporting. We test our theory using firm fixed effects and find that greater CEO–CFO personality similarity is associated with reduced audit fees. Further, we find that the tenure of the CEO–CFO relationship partially explains the relation between their personality similarity and audit fees. Finally, we find that the effect of CEO–CFO personality similarity on audit fees is stronger when corporate governance allows greater managerial autonomy, that is, CEO–CFO compatibility is more important for reducing audit risk when corporate governance is weak. Our results are robust after controlling for many other characteristics of the CEO and CFO and potential endogeneity related to CEO turnover.
期刊介绍：
The British Journal of Management provides a valuable outlet for research and scholarship on management-orientated themes and topics. It publishes articles of a multi-disciplinary and interdisciplinary nature as well as empirical research from within traditional disciplines and managerial functions. With contributions from around the globe, the journal includes articles across the full range of business and management disciplines. A subscription to British Journal of Management includes International Journal of Management Reviews, also published on behalf of the British Academy of Management.
求助内容：
应助结果提醒方式：
京公网安备 11010802042870号
