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This study advances our understanding of the current financial close process. Attention to the topic is warranted for four reasons. First, economic volatility and growth in restatements have increased pressure on companies to report performance timely, completely, and accurately to market participants. Second, recent regulations have increased the workload for accountants at period end thus negatively impacting the efficiency of the close process. Third, several SEC filings have contained control weaknesses related to the financial close process. Finally, academic research suggests that the time needed to complete the financial close process may serve as a proxy for a company's internal information environment quality. We draw upon prior research and conduct a field investigation with corporate financial officers from 22 different organizations to examine the role of four factors – need to meet expectations, collaboration among multiple participants, estimation process, and ability to incorporate new regulations – in the financial close process. Results suggest that researchers should examine further how the need to meet (or beat) expectations impacts management's actions and the effectiveness and efficiency of the financial close process. Future work could also explore how hidden profile task research and technology advances may improve the financial close process. Finally, research needs to examine how ex post estimate analysis may improve not only estimate quality but also the effectiveness and efficiency of the financial close process. |
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