The Association of CFO Turnover and Credit Rating

• Main Authors: I Hsuan Chen, 陳奕軒
• Other Authors: C. L. Liu
• Format: Others
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/18107724691755743403

碩士 === 長庚大學 === 工商管理學系 === 100 === The main duty of the chief financial officer (CFO) is to provide financial statements and to allocate capital fund effectively. As the company’s operation is more complex than before, CFOs have to share the responsibility of the CEO, such as business decision-making and investment policy. Recently financial frauds have emerged, and investors concerns about the reliability of financial information. In Taiwan, the regulator required that CFOs have to certify for the reliability of financial statements and disclosures thereby reducing financial frauds. When a company has poor credit rating, it represents bad financial conditions or financial disclosures. Thus, poor credit rating has an implication for CFO turnover. In this study, I collect data of the CFO turnover from publicly listed companies for the period 2002 through 2009. The sample size is 585 observations of the CFO turnover. This allows me to examine the association between CFO turnover and credit rating. The results show a significantly positive relation between credit rating and CFO turnover, suggesting that CFO turnover rate increases as corporate credit rating becomes poor. Overall, the findings provide in practice an useful indicator, credit rating, for CFO turnover.