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This paper provides a summary of an article authored by Steven Balsam, Afshad Irani, and Qin Jennife. Professor Steven Balsam is a senior lecturer at Temple University whereas Afshad Irani, and Qin Jennife are Associate Professors at Washington & Lee University and The University of Texas respectively. The title of the article under review is Impact of Job Complexity and Performance on CFO Compensation. It was published in the American Accounting Association Journal in September 2012. Among the many articles published, the article was in volume 26, issue No.3. It runs through pages 395-416 of the American Accounting Association Journal, 2013 publication. The authors have insurmountable credentials and experience in the field of economics and finance. They have earned their PhDs and master’s degrees in finance accounting from the renowned universities. They have written and co-authored numerous academic research papers mostly in the field of economics and finance.
In the current article, researchers sought to explore the relationship between the compensation of CFOs and the performance of firms, as well as the impact of job complexity on the firm. The researchers looked into the benefits related to having comprehensive compensation plans for employees, overhauling organizational accounting approaches, keeping open transactions, nonrecurring accounting charges and unrestricted accruals. Upon examining all five parameters, Balsam, Irani and Yin (2012) arrived at one solid conclusion: a significant positive correlation exists between the salaries of the Chief Executive Officers (C.E.Os) and chief financial officers (C.F.Os) and the performance of such companies. This is because C.E.Os and C.F.Os are tasked with the responsibility of making decisions or the firms on behalf of the company owners.
The researchers intimated there had been many studies primary on the role of C.F.Os in ensuring organizational prosperity. This is true considering that a C.F.O is responsible for maintaining the veracity of financial reports; thereby requiring C.F.Os to disclose their compensation alongside the C.E.Os’ and any, other high paid employees. According to Geiger and North (2006), a C.F.O has considerable authority over the firm’s reported financial results. Similar sentiments were echoed by Ge et al. (2011) who reported that a C.F.O is a crucial element of accounting practices. Nonetheless, to the present times very few studies have looked into C.F.Os remuneration. In the current study, Balsam, Irani...