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Why You Should Care About Your CFO's Golf Game

Donald Trump playing at one of his golf courses in Scotland.

The chief financial officer manages the financial reporting process and a report released last month found that the quality of a firm’s financial reports is sacrificed the more frequently the CFO plays golf.

The study, by Lee Biggerstaff at the Miami University of Ohio’s Department of Finance and David Cicero at the University of Alabama’s Culverhouse College of Commerce and Business Administration, examined the work and golf frequency of 385 CFOs between 2008 and 2012. On average, a CFO played 20 rounds of golf per year. The most rounds played by any CEO in a single 12-month period was 148. If we accept that one round of golf takes five hours and one work week is 40 hours, that adds up to the equivalent of almost five months of work.

The authors then tested that information against the quality of their work. The report found that the more CFOs golf, the more “accrual errors, discretionary accruals, and unexplained audit fees” are found in their work. It also found that earnings conference calls tend to be shorter with lower quality information.

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In sum, the more a CFO golfs, the worse a firm will likely perform.

The study was a follow-up to a report released last year authored by Biggerstaff and Cicero. The previous report examined CEOs’ golfing habits and the findings were fairly similar: firms with CEOs that golf more frequently don’t perform as well and tend to be valued lower than firms where CEOs golf less frequently.

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