CFO Career Diversity And Earnings Forecast Disclosure

The 2022 Government Work Report proposed the "comprehensive implementation of a stock issuance registration system" put forward the "Five Clear Requirements"centered on information disclosure,demonstrating the government’s determination to strengthen regulation and improve the quality of information disclosure.China’s performance forecast system for listed companies has been developed and improved over 30 years,and has become an important part of information disclosure for listed companies.However,the current performance forecast disclosure system in China is semi-mandatory,and the quality of performance forecasts is subjectively influenced by management motives and intentions,and objectively constrained by management capabilities and levels.As an important member of the executive team,the Chief Financial Officer(CFO)is also the main person responsible for the company’s financial information and provides crucial opinions on profit forecasts.The upper echelon theory and imprinting theory have demonstrated that executives with different background characteristics make different strategic decisions.Therefore,it can be inferred that different CFO background characteristics may lead to differences in the quality of performance forecast disclosure.Does the diversity of CFO professional backgrounds affect the performance forecast disclosure?Can a "jack-of-all-trades" CFO improve the performance forecasts?This thesis reviews and summarizes existing literature from two perspectives:executive professional background and performance forecast disclosure.Using the upper echelon theory and imprinting theory as theoretical support,this thesis proposes research hypotheses and designs a research model to address the core issues.To empirically test the effect of CFO professional background diversity on performance forecast disclosure,a sample of data from A-share listed companies in China from 2012 to 2021 was chosen.The research results show that:(1)Listed companies can benefit from hiring CFOs with diverse professional backgrounds.This can result in more accurate disclosure methods and stable predictions,which positively impact performance forecasts.(2)This trend is further enhanced when the CFO is also a director or when there is good news about performance forecasts.(3)Research shows that CFOs with diverse backgrounds often release performance forecasts with vague ranges and prediction errors.(4)When working in non-state-owned enterprises,CFOs with diverse backgrounds tend to choose more accurate disclosure methods and stable predictions for performance forecasts.To validate the reliability of the regression results,core explanatory variable replacement,voluntary disclosure sample selection,and propensity matching were all employed.This thesis investigates the correlation between CFO career diversity and the quality of performance forecast disclosure,based on upper echelon theory and imprinting theory.his conclusion enriches the research results in the fields of CFO background diversity characteristics and performance forecast information disclosure,and provides suggestions and assistance for enterprises to improve their CFO selection system,investors to make investment decisions,and regulatory authorities to carry out supervision and management.