When a company's CFO serves on another company's board,
does it help or hurt the financial reporting of the CFO's
company? It's easy to imagine that the time commitment
associated with outside board service would be a distraction from
the CFO's primary job and ultimately impair the CFO's
performance—especially since, as reported in CFO.com, a majority of finance chiefs on
outside boards are appointed to the time-consuming audit committee.
But, according to an academic study, "CFO Outside Directorship
and Financial Misstatements," just published in Accounting
Horizons, a peer-reviewed journal of the American Accounting
Association (link is to a version on SSRN), that's not the
case. In fact, the study demonstrated that outside board service
can actually enhance the quality of the financial reporting of the
CFO's company.
