“The Benefits of CFO to Corporate Information Environment: Evidence from CFO Gap” by Dr. Na LI
Dr. Na LI
Assistant Professor of Accounting
School of Accountancy
Singapore Management University
This paper examines the benefit of CFO to firms’ information environment using the settng of CFO gap. We focus on CFO gap quarters, defined as the quarters between old CFO departures and new CFO appointments when the gap between departures and appointments is more than one month. We find that CFO gap quarters are significantly associated with adverse changes in firms’ information environment. Specifically, we find that during CFO gap quarters, 1) firms are less likely to issue management earnings forecasts; 2) management forecasts are less accurate; 3) analyst forecasts are less accurate; and 4) analyst forecasts are more dispersed. In addition, we find that operating uncertainty and CEO’s lack of financial expertise aggravate the negative impact of CFO gap quarters on firms’ information environment.