This paperexamineswhyCFOsbecomeinvolvedinmaterialaccountingmanipulations.
We findthatwhileCFOsbearsubstantiallegalcostswheninvolvedinaccounting
manipulations,theseCFOshavesimilarequityincentivestotheCFOsofmatchednon-
manipulationfirms.Incontrast,CEOsofmanipulationfirmshavehigherequity
incentivesandmorepowerthanCEOsofmatchedfirms.Takentogether,ourfindings
are consistentwiththeexplanationthatCFOsareinvolvedinmaterialaccounting
manipulationsbecausetheysuccumbtopressurefromCEOs,ratherthanbecausethey
seek immediatepersonalfinancialbenefitfromtheirequityincentives.AAERcontent
analysisreinforcesthisconclusion.