This research provides theoretical, regulatory, and empirical underpinnings that financial reports are the joint representation of the certifying triangle (i.e., CEO-CFO-Auditor). This research also finds that replacement of the CEO tends to reduce the survival rate of the CFO with the firm, and vice versa; replacement of the CFO reduces the survival rate of the auditor, and vice versa. However, an association does not exist between the survival rate of the CEO and the auditor. Moreover, while a single realignment of the certifying triangle does not reduce the year-end ERC, a double (CEO-CFO) realignment significantly decreases the ERC. This negative effect is mitigated if the double (CEO-CFO and CEO-Auditor) realignment coincides with prior adverse accounting conditions. Nevertheless, the effects of a triple realignment on the ERC are not conclusive. Collectively, these results suggest that the board and the market perceive the certifying triangle as a team when it comes to financial reporting; however, the interrelations among the three vary. Further, investors uncertainty of earnings credibility increases significantly when two contracts are replaced contemporaneously. However, investors confidence is largely restored when the board acts to make the two related parties accountable for the adverse conditions that the firm runs into. Overall, triangle realignment represents a holistic effort by the board to build a well-incentivized and well-matched financial reporting team. This paper contributes to the financial reporting research by challenging the presumed homogeneity of the top executive team.
| Identifer | oai:union.ndltd.org:LSU/oai:etd.lsu.edu:etd-04112016-144544 |
| Date | 05 May 2016 |
| Creators | Li, Dong |
| Contributors | Reichelt, Kenneth, Cheng, Christine, Soileau, Jared, Song, Wei-Ling |
| Publisher | LSU |
| Source Sets | Louisiana State University |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lsu.edu/docs/available/etd-04112016-144544/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached herein a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to LSU or its agents the non-exclusive license to archive and make accessible, under the conditions specified below and in appropriate University policies, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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