A Study On The Impact Of CFO As Director On Earnings Management

In the company's separation of ownership and information asymmetry,the incomplete conformity between management and shareholders leads to the emergence of agency problems such as management moral hazard and adverse selection.Manager may not hesitate to harm shareholders' interests for personal benefit,and earnings management is a common method used by management for personal gain.As the core mechanism of corporate governance,the board of directors plays an important role in supervising and inspiring management,reducing conflicts of interest between shareholders and management,and minimizing agency costs.The influence of its composition and function on earnings management has always been hot spots on academic research.The changes in the modern economic environment and the increasing complexity of the company's operating activities pose challenges to the functions of the board of directors.The board of directors needs to obtain more business information and select professionals,especially financial talents,to provide support and guarantees for the supervision and incentive function to play its role.With the frequent occurrence of financial frauds and financial manipulations,and major financial fraud incidents related to the CFO,the CFO has received extensive public attention as a financial leader.The relevant laws and regulations have also given the CFO higher legal responsibility.It is proposed for the CFO's functions with higher requirements,the CFO urgently needs financial execution that matches the position.When the CFO enters the board of directors,while ensuring the function of the CFO,it can also affect the decision-making of the board of directors,which in turn has an impact on the importance of corporate governance.Therefore,it is undoubtedly important to examine the influence of the CFO's ownership of directors on earnings management.Based on the perspective of earnings management,this article is supported by four theories:principal-agent theory,stewardship theory,friendly board theory,and high-level echelon theory,using the data of China-Shenzhen A-Share non-financial listed companies in 2011-2016 to study the effect of the CFO's directorship status on the management and management level of earnings surplus and the actual earnings management level.Considering that the role of the CFO's directorship is a corporate governance issue,so this article also tries to examine whether there are differences in the impact of the CFO's access to the board ' s earnings management level under different corporate governance environments from different perspectives.Finally,the probabilistic score matching method(psm)was used to test the conclusion of the study.The study finds that the CFO's entry into the board of directors significantly inhibits the two types of earnings management,and has a stronger inhibitory effect on the behavior of real-account earnings management.This shows that the CFO's entry into the board of directors can reduce agency costs,improve the board's supervisory function and ease the self-interest behavior of management.Further analysis found that internal and external corporate governance environment will affect the role of the CFO's directorship.From the perspective of the company's internal environment,the CFO's directorship status can be significantly inhibit the two types of earnings management when the small power intensity of the CEO,the state-owned enterprise and the shareholding structure.Judging from the external governance environment of the company,when the external audit firm is not the top ten and the debt level is high,the CFO's director status can significantly inhibit the two types of earnings management.The research results are basically consistent with the theoretical analysis,which proves that the CFO's entry into the board of directors can improve the corporate governance level and help strengthen the supervision of the management team.The article provides a perspective for the CFO's entry into the board of directors with two types of earnings management as the starting point.This study enriches the relevant research on the CFO system,corporate governance and earnings management,and at the same time reforms the CFO system and improves corporate governance in practice.Has some reference.