Discover your dream Career
For Recruiters

Who Knew? CFOs Get Paid to 'Manage' Earnings

Chief financial officers' compensation is influenced by both the complexity of the job and the CFO's performance, according to a study by Steve Balsam, professor of accounting at the Fox School of Business at Temple University.

CFO salaries increase with the intricacy of a firm's operating, investing and financing activities, he says. Bonuses correlate with a CFO's ability to deal with analysts and meet earnings forecasts, particularly when they do so by managing accruals, the study found.

"Our findings highlight the importance to firms of meeting analyst forecasts and their willingness to incentivize and reward CFOs for doing just that," says Balsam. "Regulators and shareholders don't want CFOs managing earnings to meet targets, yet they are."

The study looked at compensation data paid to CFOs between 1993 and 2006 by the 1,500 largest U.S. companies. Mean CFO salary was $320,160, mean bonus was $219,832, and mean total compensation was $1,374,865. Each grew substantially over the study's sample period.

author-card-avatar
AUTHORDona DeZube Insider Comment
  • Ji
    Jim G. George
    21 August 2009

    Analysts say they don't want earnings

  • St
    Steve
    20 August 2009

    This is hardly a revelation - anyone who has worked in corporate finance knows this.

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Latest Jobs
Trafigura
AP/AR Analyst
Trafigura
Montevideo, United States
Trafigura
Senior Compliance Manager
Trafigura
Houston, United States
Trafigura
Oil Risk and Market Analyst
Trafigura
Montevideo, United States
QBE Insurance
Senior Quality Auditor, Contact Center
QBE Insurance
Phoenix, United States
Deutsche Bank
Assistant Vice President - {MT7085369}
Deutsche Bank
New York, United States
Deutsche Bank
Wealth Management Funds Associate
Deutsche Bank
Jacksonville, United States

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.