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<p>In this study, we investigate the relationship between CFOs’ prior audit experience and the characteristics of firms’ non-GAAP disclosure. Based on the upper echelon theory, we predict that the managerial characteristics of the CFOs, especially their prior audit experiences, impact firms’ non-GAAP reporting quality. Using a large sample of 4410 unique CFOs from 2299 firms that issued non-GAAP earnings during the period from 2003 to 2020, we find that CFOs with prior audit experience are associated with more aggressive non-GAAP reporting. We also find that these aggressive disclosures made by auditor CFOs are more informative compared to those without audit experience. Our results are robust to propensity score matching, entropy balancing, and the Heckman’s model to control selection bias. In additional analyses, we find the aggressive reporting is more prominent among firms with less analysts following, weak corporate governance, and when the CFOs are male.</p>

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CFO prior audit experience and firms’ non-GAAP reporting

  • 期刊论文

  • 发表日期：

    2025年2月20日

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  • D. G. DeBoskey,
  • Jeff Wang,
  • Lin Wang

摘要

In this study, we investigate the relationship between CFOs’ prior audit experience and the characteristics of firms’ non-GAAP disclosure. Based on the upper echelon theory, we predict that the managerial characteristics of the CFOs, especially their prior audit experiences, impact firms’ non-GAAP reporting quality. Using a large sample of 4410 unique CFOs from 2299 firms that issued non-GAAP earnings during the period from 2003 to 2020, we find that CFOs with prior audit experience are associated with more aggressive non-GAAP reporting. We also find that these aggressive disclosures made by auditor CFOs are more informative compared to those without audit experience. Our results are robust to propensity score matching, entropy balancing, and the Heckman’s model to control selection bias. In additional analyses, we find the aggressive reporting is more prominent among firms with less analysts following, weak corporate governance, and when the CFOs are male.