Impact of Job Complexity and Performance on CFO Compensation

This study investigates the impact of job complexity and firm as well as CFO-specific performance on CFO compensation. We examine job complexity in terms of the intricacies of a firm’s operations and whether the CFO serves on the Board of Directors. Accounting and stock market rates of return measure overall firm performance while the magnitude and success of the CFO’s interactions with financial analysts along with CFO’s use of accounting discretion to achieve earnings targets proxy for CFO-specific performance. We find that, consistent with our predictions, job complexity and performance (firm and CFO-specific) affect CFO compensation.