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If you are a manager, chief financial officer or auditor working for a company that comes out with a restatement, start looking for another job. That's the only conclusion you can draw from a new study from Anup Agrawal and Tommy Cooper who are both at the University of Alabama's Culverhouse College of Business.

Their study, Corporate Governance Consequences of Accounting Scandals:Evidence from Top Management, CFO and Auditor Turnover, found that restating firms have greater turnover of CEOs, top management and CFOs than control firms. It revealed that during the three-year period of the study, restating CEOs, CFOs and top management experience turnover rates of 53 per cent, 65 per cent and 85 per cent respectively. That was well up on the control firms where it was 34 per cent, 43 per cent and 59 per cent respectively. All up, they face, respectively, a 14 per cent, 10 per cent and 8.5 per cent greater chance of being replaced.

There is an even greater likelihood of the person losing their job when there is a big restatement.


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  1. Leon–Your blog about the CFO and CEO departures got me interested. The numbers cited by the U of Alabama looked dramatic. BUT, when you look closely, that 65% turnover rate for CFOs of restating companies nearly disappears. Turns out, deep in the report, that they have a control group of NON-restating companies. And when they compare the turnover between the two groups, the CFOs at restating companies turn out to be only 10 percent more likely to depart. Have you read the entire report? Is that your conclusion as well? I’d be interested, because I’m doing an article for CFO.com about the findings. It seems to undercut the conclusion in your blog that “If you are a manager, chief financial officer or auditor working for a company that comes out with a restatement, start looking for another job.” I’ll be happy to print your response in the article if I receive it in time. My email is royharris@cfo.com.

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