Asset impairments surrounding chief financial officer turnover

Martin Bugeja, Michelle Spiller, Helen Spiropoulos and Peter Wells

Australian Journal of Management, 2025, vol. 50, issue 4, 1359-1384

Abstract: We examine the effect of chief financial officer (CFO) turnover on the likelihood and size of asset impairments. Using Australian data, we find evidence consistent with incoming CFOs recording larger asset impairments, particularly when they are external hires with prior listed experience, or receive equity-based compensation. Our results also indicate that outgoing CFOs report higher profits in the year prior to their departure by reporting fewer and smaller asset impairments. This effect is larger when outgoing CFOs move to another listed firm or receive equity-based compensation, consistent with reputational and compensation incentives to maximise earnings. Overall, our results provide evidence of the independent influence CFOs have on financial reporting. JEL Classification: M41, G34, M40

Keywords: Chief financial officer turnover; earnings management; impairment (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:50:y:2025:i:4:p:1359-1384

DOI: 10.1177/03128962241270757

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