“Executive Accountants and the Reliability of Financial Reporting” Reveals New Findings

Nov. 17, 2020

Faculty Research

Study Co-Authored by University of Arizona Eller College of Management Assistant Professor

Dan Russomanno, assistant professor of accounting in the Dhaliwal-Reidy School of Accountancy at The University of Arizona’s Eller College of Management, has co-authored a study titled “Executive Accountants and the Reliability of Financial Reporting” with Adrienne Rhodes, assistant professor at the University of Iowa Tippie College of Business. The study, set to be published in Management Science, examines the impacts of delegating accounting and financial reporting responsibility to a dedicated executive accountant versus only a CFO.


Dan Russomanno
Dan Russomanno

“Over the last several years, the responsibilities of the CFO have expanded well beyond financial reporting, to serving as a strategic partner to the CEO. Yet, regulatory demands related to financial reporting continue to grow,” says Russomanno. “Given this, we wanted to know whether the delegation of a CFO’s accounting and financial reporting responsibility to an executive accountant impacts financial reporting.”

To conduct the study, Russomanno and Rhodes hand-collected data from mandatory disclosures of executive officers for almost 31,000 firm-years, from 2000 through 2016. Using this data, the authors were able to identify firms that delegate significant accounting responsibility to an executive accountant, defined as an executive not concurrently serving as the CFO or CEO. After examining the data, Rhodes and Russomanno discovered more reliable financial reporting was found at firms that had a dedicated executive accountant compared to firms in which the CFO fully retained this responsibility. Specifically, they found that firm-years with an executive accountant rather than a CFO solely taking on the responsibility are associated with a significant reduction in the likelihood of restatement, timelier remediation of material weaknesses in internal control, and higher quality accruals.

Russomanno noted the observation that about one-third of all publicly traded companies delegate this responsibility to an executive accountant is in stark contrast to prior research that focuses on the impact of CEOs and CFOs on financial reporting. He adds, “Regulators may consider expanding the required executive certifications over financial reporting to include executive accountants, when present, given the economically significant impact this position has on the reliability of financial reporting.”

About the University of Arizona Eller College of Management: Home to 5,800 undergraduate and 750 graduate students, the University of Arizona Eller College of Management is a comprehensive business school with a global reputation for innovative research, rigorous curriculum, a distinguished faculty, excellence in entrepreneurship and social responsibility. The College’s mission is to support and develop a community of scholar and learners whose knowledge, integrity and entrepreneurial spirit will transform business and society. For more, visit www.eller.arizona.edu.