CFOs that Golf All the Time are Hurting Their Companies

Wesley Gray |

A study from Biggerstaff, Cicero and Puckett (2014) shows that a CEO’s’ golfing frequency is negatively correlated with firms’ operating performance and firm value. In this paper, the authors look at the relationship between a CFO’s golfing frequency and a firm’s’ financial reporting quality. The punchline: Turns out, CFO behavior matters.

The sample consists of 385 CFOs from 2008 to 2012, and the authors collect the golfing data from the United States Golf Association (USGA).

The chart below shows the distribution of the 385 CFO’s golf playing rounds from 2008 to 2012. The average rounds that CFOs play per year are 20. Assuming an average round takes five hours and the average working hours/week is 40, this is roughly equivalent to 2.5 weeks of work. The maximum rounds that a CFO played in this sample is 148 rounds (4.6 months of work, wow!)

CFO Golfing

Key Findings from the Paper

  1. The paper finds positive correlations between CFO’s golfing frequency and accrual errors, discretionary accruals, and unexplained audit fees.
  2. Higher CFO leisure consumption is associated with a decreased quality and quantity of information provided during the earnings conference call.
  3. Higher CFO leisure consumption is associated with higher analyst forecast dispersion and lower earnings responses.

So the lesson? Watch out for firms where the CFO and the CEO are always golfing!

CFOs that Golf All the Time Hurt Their Companies was originally posted by Wesley R. Gray at Alpha Architect. Please read the Alpha Architect Disclosures at your convenience.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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