CFO Career Concerns and Financial Reporting Decisions

We find that firms led by Chief Financial Officers (CFOs) who are relatively more concerned about their future job prospects are less likely to take actions that result in poor discretionary quality reporting during an Initial Public Offering (IPO). In addition, our results show that CFOs with more serious career concerns are encouraged to undertake rightful actions among firms which are headquartered in the states that have stricter enforceability of non-compete clauses, when they face greater (reputation, litigation, and job status) penalties associated with distorted financial reports, or when they are subject to stringent monitoring. Finally, we document that CFOs with greater career concerns are associated with better post-IPO labor market outcomes. Overall, our findings indicate that career concerns play a disciplining role during IPOs and that CFOs exploit these high-visibility events to accelerate their career trajectory