Impact of Job Complexity and Performance on CFO Compensation

ABSTRACT

This study investigates the impact of job complexity and firm, as well as CFO-specific performance, on CFO compensation. We find job complexity and overall firm performance affects both CFO salary and bonus, while CFO-specific performance affects CFO bonus. Specifically, we find that CFOs are not only rewarded when their firms meet or beat earnings targets, but they get incremental rewards for managing earnings and/or expectations to allow their firms to meet or just beat those targets.

Keywords: CFO compensation, job complexity, CFO performance, earnings targets, earnings management, expectations management.

Sources : Steven Balsam,Afshad J. Irani,Qin Jennifer Yin (2012) Impact of Job Complexity and Performance on CFO Compensation. Accounting Horizons: September 2012, Vol. 26, No. 3, pp. 395-416.