 Firm CFO board membership and departuresShawn Mobbs Journal of Corporate Finance, 2018, vol. 51, issue C, 316-331 Abstract: I investigate firm financial management when the CFO has greater authority by being on the board and the corresponding changes when the CFO position leaves the board. After the 2002 regulatory changes to board composition requirements, determinants of CFO board membership shift from being driven by firm financing needs to being driven by managerial transition and the local supply of outside directors. Shareholders react negatively to CFO board departure announcements, especially in the post-Sarbanes-Oxley period and when the firm is expected to have their CFO on the board. When the CFO is on the board, firms have lower cash holdings, exhibit faster adjustment toward their optimal capital structure following shocks and are less financially constrained. These measures of greater financial flexibility diminish when the CFO position leaves the board, particularly for cash management activities. In sum, board membership is an important CFO characteristic affecting firm financial management decisions. Keywords: CFO; Inside directors; Financial expertise; Financial policy; Boards (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:51:y:2018:i:c:p:316-331 DOI: 10.1016/j.jcorpfin.2018.06.006 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.