IDEAS home Printed from https://ideas.repec.org/a/eme/jalpps/jal-03-2022-0031.html
   My bibliography  Save this article

Supervision or collusion? CEO–CFO social ties and financial reporting quality

Author

Listed:
  • Xingtong Fang
  • Kaigang He
  • Yijun Meng
  • Jianfang Ye

Abstract

Purpose - Social ties may either help chief executive officers (CEOs) supervise chief financial officers' (CFOs) behaviors effectively and improve financial reporting quality or lead to collusion and undermine financial reporting quality. Therefore, this paper examines the impact of social ties between CEOs and CFOs on financial reporting quality. Design/methodology/approach - This paper constructs the CEO–CFO social ties through their mutual alma mater or birthplace. Based on 6,787 Chinese non-financial firm-year observations from 2003 to 2020, the paper conducts an empirical test using the multiple regression method. Findings - The main finding is that firms with CEO–CFO social ties are more likely to exhibit higher financial reporting quality. CEOs with social ties to CFOs can obtain a high level of information and exert a better supervisory and monitoring role. Further, CEO–CFO social ties are more effective when the CEO does not have a financial background and when the institutional environment is weak. Originality/value - This paper mainly contributes to the literature exploring the impact of executive characteristics on financial reporting quality and the literature examining the relation between social ties and corporate behaviors. Meanwhile, the paper emphasizes the important role of social ties as an informal monitoring mechanism in practice.

Suggested Citation

  • Xingtong Fang & Kaigang He & Yijun Meng & Jianfang Ye, 2022. "Supervision or collusion? CEO–CFO social ties and financial reporting quality," Journal of Accounting Literature, Emerald Group Publishing Limited, vol. 44(2/3), pages 133-153, September.
    • Handle: RePEc:eme:jalpps:jal-03-2022-0031
    DOI: 10.1108/JAL-03-2022-0031
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JAL-03-2022-0031/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/JAL-03-2022-0031/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/JAL-03-2022-0031?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Huixiang Zeng & Limin Zheng & Xiaoyu Li & Yutong Zhang & Linrong Chen, 2023. "Are optimistic CEOs and pessimistic CFOs the best partners? Evidence from corporate cash holdings," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-19, December.
    2. Mohammad Nasih & Raden Roro Widya Ningtyas Soeprajitno & Iman Harymawan & John Nowland, 2023. "Top Company Officers and Auditor School-ties on Audit Fee: Evidence From Indonesia," SAGE Open, , vol. 13(4), pages 21582440231, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jalpps:jal-03-2022-0031. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.