Quality of financial reporting does not suffer
The researchers focused on discretionary accruals, which are non-cash accounting items usually based to some degree on estimates, e.g. anticipated revenue from credit sales or predictions of bad debt. Here there is room for managerial manipulation. It turned out, however, that companies with duality of the CFO and COO functions had an edge in the accuracy of these estimates.
In the field of discretionary operational expenditures (which include e.g. advertising, R&D, sales and administrative expenses) there was no difference between companies with dual and separated roles of CFO and COO.
CFO/COO duality works: but why?
To sum up, it may be stated that the quality of operations and financial reporting in companies with CFO and COO duality is equal to or even better than that in companies with traditional separation of these two executive roles.
Although the researchers offer no definitive conclusion as to why this should be, they do have a certain theory, suggesting intrapersonal functional diversity is good for company performance. Sometimes there are also hiccups in communication of specialists in different fields. When the two roles are unified in one person, any communication problems cannot occur simply because no communication actually takes place.
This communication hypothesis seems likely to be true as the relationship between CFOs and COOs is frequently somewhat adversarial. This is the conclusion of an article on the cfo.com website.
-jk-