| Author: | Law, Lok Yin |
| Title: | The importance of CFO’s monitoring role on CEO : which CFOs are more likely to say “No” to their CEOs’ wrongdoing? |
| Advisors: | Cheng, Agnes (AF) Wu, Qiang (AF) |
| Degree: | D.B.A. |
| Year: | 2022 |
| Subject: | Chief financial officers Chief executive officers Corporations -- Finance -- Management Hong Kong Polytechnic University -- Dissertations |
| Department: | Faculty of Business |
| Pages: | 156 pages : color illustrations |
| Language: | English |
| Abstract: | This paper studies the function of the Chief Financial Officer (CFO) in governing the Chief Executive Officer (CEO). Despite the growing demand for developing strategic partnerships between these two highest-ranking executives, there are situations when they have divergence in thoughts and conflict of interests, especially when CEOs are tempted to pursue self-interests and conduct wrongdoing at the expense of companies and shareholders. Using the prevalent option backdating events in 1999–2015 for US-listed companies as a proxy for CEO wrongdoing, I investigate 14 attributes of CFOs and CEOs and their pairings. By adopting the Fraud Triangle Framework and the Principal Component Analysis, composite indices are constructed to measure the forewarning power of CFOs, and the temptation and power of CEOs to commit wrongdoing. The results demonstrate that CFOs of high forewarning power are effective in curbing CEOs' misbehaviors. The influence of the CFOs' gatekeeping role becomes more pronounced in the case of powerful and tempted CEOs. I also investigate the impacts when CFOs face different CEOs and corporate governance environments, and when CFOs are the successors of CEOs. As CFOs constantly gain responsibilities and evolve in relationships with their key stakeholders, they should possess distinctive qualities to offset the pressure and risks from their CEOs. My findings shed light on the increasing trends to study CFOs and observe from their perspectives how to handle the complex interrelations with CEOs, who are typically viewed as having manager-subordinate or principal-agent connections. |
| Rights: | All rights reserved |
| Access: | restricted access |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| 6349.pdf | For All Users (off-campus access for PolyU Staff & Students only) | 3.13 MB | Adobe PDF | View/Open |
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