Date of Award


Document Type

Campus Access Dissertation

Degree Name

Doctor of Philosophy (PhD)


Business Administration

First Advisor

Jay Junghun Lee

Second Advisor

Yong-Chul Shin

Third Advisor

Atreya Chakraborty


This dissertation encompasses three essays that investigate how chief financial officers (CFOs) with different levels of accounting expertise affect corporate financial reporting like the degree of earnings management and tax avoidance, and how the stock market values their accounting expertise. The first essay examines the incentives of CFOs to manage earnings in the early stage of tenure. It suggests that CFOs are more likely to undertake income-increasing earnings management in the early years of their tenure than in the later years, and that CFOs with accounting backgrounds (i.e., accountant CFOs) are less likely to overstate earnings than those without accounting backgrounds (i.e., non-accountant CFOs). This paper sheds light on how short-term career concerns and long-term reputation concerns shape managerial incentives for earnings management.

The second essay investigates whether and how equity investors value the accounting expertise of CFOs in managing cash assets. Empirical evidence shows that the stock market places a higher value to cash assets when firms replace a non-accountant CFO with an accountant CFO. Specifically, the market value of an additional dollar of cash increases by 92 cents following such CFO turnovers. Moreover, the positive effect of CFO’s accounting backgrounds on the market value of cash is particularly evident for firms in low growth industries and firms with weak corporate governance. These results suggest that the market acknowledges the value of CFO’s accounting expertise, especially when firms operate in low growth industries and face severe agency problems.

The third essay examines the association between accountant CFOs and corporate tax avoidance. I attempt to explore the impact of specialized accounting knowledge of CFOs on general and aggressive tax avoidance strategies. Consistent with my conjectures, I find that having accounting competence among CFOs is positively associated with their general tax avoidance behavior, suggesting that CFOs take advantage of their professional knowledge to reduce corporate tax payment to related tax authorities. In addition, the empirical evidence also shows that accountant CFOs are less likely to involve in aggressive tax avoidance strategies. This conclusion is consistent with prior studies arguing that accountant CFOs are risk averse and conservative. In summary, accountant CFOs have different attitudes towards various tax avoidance activities depending on the underlying tax position of the tax planning behavior.


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