Busyness on the CFO Accounting Performance

This study investigates the impact of Chief Financial Officers' (CFOs) social networks on accounting conservatism, focusing on how their involvement in external activities influences their performance in financial reporting. Using firm data from the Taiwan stock market from 2006 to 2014, we evaluate CFO social networks through their professional connections and career trajectories. Our findings reveal a significant negative association between the extent of CFO social networks and accrual-based loss recognition, indicating that extensive social networking activities may lead to lower levels of accounting conservatism. Additionally, we document that the impact of CFO social networks on accounting conservatism is mitigated when the CEO holds absolute power within the company. These results suggest that while director networks can reduce information asymmetry, they may also lead to managerial busyness and entrenchment, thereby diminishing the need for conservative accounting practices. This study provides valuable insights for regulators, corporate directors, and investors by highlighting the potential detrimental effects of CFO social networks on financial reporting quality.