The existing literature documents that the functional expertise of Chief Executive Officers (CEOs) in finance reduces the poor performance risk, improves financial reporting quality, and mitigates the audit risk. In this study, we examine the association between CEOs’ financial background and internal control weaknesses (ICWs). Research Findings/Insights Using a sample of Iranian listed companies for the period 2007‐2017, we find a significant negative association between CEOs with financial expertise and ICWs. Furthermore, we show that the negative association between CEO financial expertise and ICWs is stronger if the CEO is recruited from inside the firm. Our main results are robust after controlling for the potential selection issue, fixed effects at the firm‐level, and the impact of the new Iranian internal control regulations. Moreover, our results remain unchanged after controlling for other CEO characteristics, audit committee characteristics, audit fees, and using an alternative measure of financial expertise.

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