Doctor of Philosophy (PhD)



Document Type



This research provides theoretical, regulatory, and empirical underpinnings that financial reports are the joint representation of the certifying triangle (i.e., CEO-CFO-Auditor). This research also finds that replacement of the CEO tends to reduce the survival rate of the CFO with the firm, and vice versa; replacement of the CFO reduces the survival rate of the auditor, and vice versa. However, an association does not exist between the survival rate of the CEO and the auditor. Moreover, while a single realignment of the certifying triangle does not reduce the year-end ERC, a double (CEO-CFO) realignment significantly decreases the ERC. This negative effect is mitigated if the double (CEO-CFO and CEO-Auditor) realignment coincides with prior adverse accounting conditions. Nevertheless, the effects of a triple realignment on the ERC are not conclusive. Collectively, these results suggest that the board and the market perceive the certifying triangle as a team when it comes to financial reporting; however, the interrelations among the three vary. Further, investors’ uncertainty of earnings credibility increases significantly when two contracts are replaced contemporaneously. However, investors’ confidence is largely restored when the board acts to make the two related parties accountable for the adverse conditions that the firm runs into. Overall, triangle realignment represents a holistic effort by the board to build a well-incentivized and well-matched financial reporting team. This paper contributes to the financial reporting research by challenging the presumed homogeneity of the top executive team.



Document Availability at the Time of Submission

Release the entire work immediately for access worldwide.

Committee Chair

Reichelt, Kenneth



Included in

Accounting Commons