Corporate Financial Leader Genders’ Effect on Financial Reporting Decisions in an Obedience Pressure Setting
DOI:
https://doi.org/10.60154/jaepp.2025.v26n1p115Keywords:
Behavioral decision making, corporate financial leader, gender, financial reporting quality, obedience pressure, occupational socializationAbstract
The accounting profession is rules-based but requires corporate financial leaders to make judgments in applying these rules to a particular set of facts. This study focuses on how that judgment can be susceptible in an obedience pressure setting when told to change the financial statements by a superior. Specifically, this study examines the effects of chief executive officer (CEO) gender and corporate financial leader gender effects on corporate financial leader decisions in an obedience pressure setting. The study uses a 2 x 2 between-subjects experiment and practicing corporate financial leaders as participants. The results find a significant relationship between corporate financial leaders gender and corporate financial leaders judgment. Female corporate financial leaders report more conservative earnings than male corporate financial leaders in an obedience pressure environment. However, the gender of the CEO is not relevant to the decision of the corporate financial leader. The study supports occupational socialization, with corporate financial leaders prioritizing their responsibility for financial reporting quality over their relationship with the CEO.
References
1. AICPA. (2021). “2021 Trends Report”, available at: https://www.thiswaytocpa.com/collectedmedia/files/trends-report-2021.pdf (accessed 21 June 2024)
2. Betz, M., O’Connell, L. and Shepard, J.M. (1989), “Gender differences in proclivity for unethical behavior”, Journal of Business Ethics, Vol. 8 No. 5, pp.321-324. https://doi.org/10.1007/BF00381722
3. Bishop, C.C., DeZoort, F.T. and Hermanson, D.R. (2017), “The effect of CEO social influence pressure and CFO accounting experience on CFO financial reporting decisions”, Auditing: A Journal of Practice and Theory, Vol. 36 No. 1, pp.21-41. https://doi.org/10.2308/ajpt-51507
4. Caglio, A., Dossi, A. and Van der Stede, W.A. (2018), “CFO role and CFO compensation: An empirical analysis of their implications”, Journal of Accounting and Public Policy, Vol. 37 No. 4, pp.265-281. https://doi.org/10.1016/j.jaccpubpol.2018.07.002
5. Davis, S., DeZoort, F.T. and Kopp, L.S. (2006), “The effect of obedience pressure and perceived responsibility on management accountants’ creation of budgetary slack”, Behavioral Research in Accounting, pp.19-35. https://doi.org/10.2308/bria.2006.18.1.19
6. DeZoort, F.T. and Lord, A.T. (1997), “A review and synthesis of pressure effects research in accounting”, Journal of Accounting Literature, Vol. 16, pp.28-85.
7. DeZoort, F.T., Hermanson, D.R. and Houston, R.W. (2003), “Audit committee member support for proposed audit adjustments: a source credibility perspective”, Auditing: A Journal of Practice & Theory, Vol. 22 No. 2, pp.189-205. https://doi.org/10.2308/aud.2003.22.2.189
8. Dichev, I.D., Graham, J.R., Harvey, C.R. and Rajgopal, S. (2013), “Earnings quality: evidence from the field”, Journal of Accounting and Economics, Vol. 56 No. 2-3, pp.1-33. https://doi.org/10.1016/j.jacceco.2013.05.004
9. Estrada, S. (2023), “There are now 63 female CFOs at Fortune Global 500 companies. Here’s the full list”, available at: https://fortune.com/2023/08/17/female-cfos-at-fortune-global-500-companies/ (accessed 21 June 2024)
10. Feng, M., Ge, W., Luo, S. and Shevlin, T. (2011), “Why do CFOs become involved in material accounting manipulations?”, Journal of Accounting and Economics, Vol. 51 No. 1, pp.21-36. https://doi.org/10.1016/j.jacceco.2010.09.005
11. Foley, S., Linnehan, F., Greenhaus, J.H. and Weer, C.H. (2006), “The impact of gender similarity, racial similarity, and work culture on family-supportive supervision”, Group and Organization Management, Vol. 31 No. 4, pp.420–441. https://doi.org/10.1177/1059601106286884
12. Friedman, H.L. (2014), “Implications of power: When the CEO can pressure the CFO to bias reports”, Journal of Accounting and Economics, Vol. 58 No. 1, pp.117-141. https://doi.org/10.1016/j.jacceco.2014.06.004
13. Ge, W., Matsumoto, D. and Zhang, J.L. (2011), “Do CFOs have style? An empirical investigation of the effect of individual CFOs on accounting practices”, Contemporary Accounting Research, Vol. 28 No. 4, pp.1141-1179. https://doi.org/10.1111/j.1911-3846.2011.01097.x
14. Geiger, M.A. and North, D.S. (2006), “Does hiring a new CFO change things? An investigation of changes in discretionary accruals”, The Accounting Review, Vol. 81 No. 4, pp.781-809.
15. Ham, C., Lang, M., Seybert, N. and Wang, S. (2017), “CFO narcissism and financial reporting quality”, Journal of Accounting Research, Vol. 55 No. 5, pp.1089-1135. https://doi.org/10.1111/1475-679X.12176
16. Hambrick, D.C. and Mason, P.A. (1984), “Upper echelons: The organization as a reflection of its top managers”, Academy of Management. The Academy of Management Review, pp.193-206. https://doi.org/10.2307/258434
17. Kelley, R.E. (1992), The Power of Followership. Doubleday, New York, NY.
18. Khanna, V., Kim, E.H. and Lu, Y. (2015), “CEO connectedness and corporate fraud”, The Journal of Finance, Vol. 70 No. 3, pp.1203-1252. https://doi.org/10.1111/jofi.12243
19. Krishnan, G.V. and Parsons, L.M. (2008), “Getting to the bottom line: An exploration of gender and earnings quality”, Journal of Business Ethics, Vol. 78 No. 1-2, pp.65-76. https://doi.org/10.1007/s10551-006-9314-z
20. Liu, Y., Wei, Z. and Xie, F. (2016), “CFO gender and earnings management: Evidence from China”, Review of Quantitative Finance and Accounting, Vol. 46 No. 4, pp.881-905. https://doi.org/10.1007/s11156-014-0490-0
21. Mason, E.S. and Mudrack, P.E. (1996), “Gender and ethical orientation: A test of gender and occupation socialization theories”, Journal of Business Ethics, Vol. 15 No. 6, pp.599-604. https://doi.org/10.1007/BF00411793
22. Mian, S. (2001), “On the choice and replacement of chief financial officers”, Journal of Financial Economics, Vol. 60 No. 1, pp.143-175. https://doi.org/10.1016/S0304-405X(01)00042-3
23. Peni, E. and Vähämaa, S. (2010), “Female executives and earnings management”, Managerial Finance, Vol. 36 No. 7, pp.629-645. https://doi.org/10.1108/03074351011050343
24. Plöckinger, M., Aschauer, E., Hiebl, M.R.W. and Rohatschek, R. (2016), “The influence of individual executives on corporate financial reporting: a review and outlook from the perspective of upper echelons theory”, Journal of Accounting Literature, Vol. 37, pp.55-75. https://doi.org/10.1016/j.acclit.2016.09.002
25. Smith, A. and Rogers, V. (2000), “Ethics-related responses to specific situation vignettes: Evidence of gender-based differences and occupational socialization”, Journal of Business Ethics, Vol. 28 No. 1, pp.73-86. https://doi.org/10.1023/A:1006388923834
26. Tajfel, H. and Turner, J.C. (1986), The social identity theory of intergroup behavior. Hall Publishers, Chicago, IL.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Jessica L. Evanko
This work is licensed under a Creative Commons Attribution 4.0 International License.
