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Article
Publication date: 4 May 2012

Bruce Gurd and Jill Thomas

The interaction of the chief financial officer (CFO) with family and non‐family managers is important for the financial management of a family business to maximise wealth…

Abstract

Purpose

The interaction of the chief financial officer (CFO) with family and non‐family managers is important for the financial management of a family business to maximise wealth creation within the business. This paper explores the role and the possible conflict with managers from the family.

Design/methodology/approach

A mixed method is used combining interviews of CFOs, CEOs and a telephone survey of CFOs in Australia. Three propositions are tested.

Findings

Surprisingly, the authors find no evidence that there is substantial role conflict as has been found in previous research. Relationships with the family CEO and other family and non‐family managers are usually positive. Commitment to the business from the family and strong support from the CEO are identified as making the CFO's job easier. Conflict with external accountants appears to be minimised as external accountants usually focus on the management of personal financial affairs and taxation issues while the CFO focuses on business financial management.

Research limitations/implications

The sample is Australian and relatively small.

Practical implications

The contribution of the CFO will be optimised by giving them the opportunity to move out of the “bean counter” role to a more strategic financial management position.

Originality/value

There is limited empirical evidence relating to the role of the CFO in the family business.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 18 no. 3
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 5 June 2017

Laura Zoni and Federico Pippo

According to the chief financial officer (CFO) of IBM Global Survey (2010), only few integrated finance organizations (IFOs) and only some CFOs’ role (Value Integrators…

Abstract

Purpose

According to the chief financial officer (CFO) of IBM Global Survey (2010), only few integrated finance organizations (IFOs) and only some CFOs’ role (Value Integrators) allow companies to generate value so as to outperform their peers. The purpose of this study is to gather additional insights on how the CFOs and finance organizations effectively promote value creation in for-profit organizations.

Design/methodology/approach

The authors’ study has been developed through the methodology of case studies. The method, despite its intrinsic limitations, offers a much deeper understanding of the organizational context within which value creation takes place. The authors’ analysis is based on nine selected case studies of Italian industrial companies, selected to assure comparability with the IBM sample. All companies outperform their peers.

Findings

The authors observed that not only IFOs and value integrator CFOs support the value generation process. The authors’ sample suggests a variety of other relevant and likely alternatives for value creation deriving from both finance functions (FFs) and the roles of CFOs. Their findings indicate that FFs adopt three distinct patterns to add value for the shareholders. The first option involves the FF taking the lead in setting a common language across functions, management processes, management and stakeholders. The second value creation pattern is when the FF establishes a strong and relevant support to business. The third option implies that the FF acts as an advisor assuring independent compliance. The authors also concluded that regardless of the CFO’s roles, influential CFOs are older, with a deep functional company and industry experience. They also observe that some of this influence derives from “proximity” to shareholders, as all the more influential CFOs sit on the Board, enjoying a closer relationship with the shareholders.

Research limitations/implications

This study was based on clinical cases, the findings can be generalized reliably only for the population studied here. More research is needed for further tests and explorations of these findings, especially in the area of CFO incentives and governance mechanisms.

Practical implications

This study supports modern advice given to organizations in terms of the array of available alternatives to promote value creation with patterns and processes within the domain of the finance organization and CFO’s personal characteristics.

Social implications

The paper contributes to untangle some gender issues, as the authors found that more influential CFOs are male. The authors have also contributed to explain some dynamics of the “labor” market development for finance professionals: the authors observed that the promotion for most influential CFOs comes through the ranks of a specific company, and this questions if a market really exits for such professionals in Italy, and more generally in Europe.

Originality/value

These results provide some useful support of prior findings and some modifications and extensions that further the authors’ understanding in this area of importance both to researchers and practitioners.

Details

Journal of Accounting & Organizational Change, vol. 13 no. 2
Type: Research Article
ISSN: 1832-5912

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Article
Publication date: 4 February 2014

Martin R.W. Hiebl and Birgit Feldbauer-Durstmüller

Benedictine abbeys are highly stable organisations that have existed for almost 1,500 years. The extant literature ascribes this stability in part to the notion of…

Abstract

Purpose

Benedictine abbeys are highly stable organisations that have existed for almost 1,500 years. The extant literature ascribes this stability in part to the notion of Benedictine governance, which centres on the Rule of St Benedict (RB). An integral part of Benedictine governance is the cellarer, who plays a role comparable to that of a chief financial officer (CFO) in a traditional corporation. Unlike corporations, however, in which the CFO has emerged into a more important role over the past few decades, the cellarer has been an official position in Benedictine abbeys since the introduction of the RB in the sixth century. The present paper aims to explore the cellarer's role and assesses which parts of it could be reasonably transferred to the corporate world.

Design/methodology/approach

Informed by organisational role theory, the authors conducted a single case study in an Austrian Benedictine abbey. The authors used group discussions and semi-structured interviews as the main research instruments.

Findings

The authors find that the cellarer's behaviour shows strong signs of stewardship, which could serve as a role model for corporate CFOs. However, because of the studied abbey's situation of financial distress, the cellarer also experienced severe role conflicts rooted in his obedience to the abbot, the high involvement of the abbey in the local economy, and the cellarer's conscience as a Christian monk. From these findings, the authors describe those aspects of the cellarer's role that should thus be avoided for corporate CFOs.

Research limitations/implications

The presented findings are based on a single case study. Therefore, because of the contextual factors idiosyncratic to the abbey under investigation, the results must be interpreted with care. Nevertheless, the findings explain the cellarer's role and depict its potential benefits for the corporate world, which should induce further research.

Originality/value

This is the first paper to explore in-depth the cellarer's role as well as one of the first to transfer the potential benefits of single roles rooted in Benedictine governance to the corporate world.

Details

Society and Business Review, vol. 9 no. 1
Type: Research Article
ISSN: 1746-5680

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Article
Publication date: 1 April 2010

T. Voogt

The roles and responsibilities of the chief financial officer (hereafter CFO) have evolved dramatically over the past 10 years. This article explores this evolution from a…

Abstract

The roles and responsibilities of the chief financial officer (hereafter CFO) have evolved dramatically over the past 10 years. This article explores this evolution from a South African perspective by, firstly, presenting an extensive literature review on the matter. Secondly, a unique South African model of the key focus areas for CFOs is proposed. Lastly, the results of a questionnaire administered to the CFOs of FTSE/JSE Top 40 companies are reported. The results revealed significant findings relating to the CFO’s most important current and future role ‐ that of planner and strategist. In addition, CFOs at the top of the corporate ladder expect to focus more on their role as a growth and innovation catalyst. This article also identifies three key areas for future research that will make an important contribution to the continued development of the educational framework for chartered accountants.

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Article
Publication date: 24 May 2019

Junli Yu, Shelagh M.R. Campbell, Jing Li and Zhou Zhang

The Chief Financial Officer (CFO), despite being a critical organization member responsible for ensuring quality of financial reporting, audit and compliance, is…

Abstract

Purpose

The Chief Financial Officer (CFO), despite being a critical organization member responsible for ensuring quality of financial reporting, audit and compliance, is under-researched. Grouped as a member of top management teams (TMS) in studies, factors influencing decision making in this group rely on static measures of characteristics without regard for dynamic and longitudinal influences of career trajectories and industry occupational group memberships. The relationship between the high-tech industry as a site of notable reported internal control (IC) weakness and influences on CFOs requires closer examination. The paper aims to discuss these issues.

Design/methodology/approach

The study draws together the upper echelons theory and occupational communities (OCs) to explore the impact of shared values and behavioral norms from different sources on executive decision making. Internal and external sources of OC are proposed and their influence on activities with respect to corporate IC is tested. The sample of 1,573 firm/year observations includes high-tech firms listed on major US exchanges was developed using data from five distinct databases. Executives’ biographic information was manually collected.

Findings

Results indicate that senior financial executives belong not only to their firm and its culture but also to OCs that extend beyond the firm. Membership in professional credential granting occupational groups has less impact on effective IC than experience in the high-tech industry. In combination, multiple OCs show evidence of compound and counteracting effects on IC. The OC that arises in the high-tech industry makes a measurable positive difference in the quality of IC in sample firms, in contrast with the OC among credentialed accounting and financial professionals.

Research limitations/implications

This quantitative study of OC reveals the differential impact of different sources of OC and contributes to the literature on TMS a new framework for examining decision making. OC is typically studied through qualitative methods and, thus, potential exists to further explore the specific nature and dynamics of the OCs identified in this study.

Practical implications

The study highlights the role of broad affiliations and networks among senior financial executives which may have bearing on their ability to effectively manage IC. The role of these networks may also partially explain instances of CFO failure and thus dismissal. Knowledge of the role of OC may help boards of directors in the selection and promotion of senior financial officers of the firm.

Originality/value

The paper offers a different perspective on professional accounting expertise in one specific industry where incidence of IC weakness is high relative to other industries. Study results expand recent research on TMS to include sociological impacts of cohort groups. Despite generally weaker IC in the high-tech sector, this study demonstrates the value of exploring group membership within the industry as an important predictor of behavior. The result is a new perspective to CFO decision making which illustrates the relevance of OCs among upper echelons. The implications of findings for CFO recruitment and promotion are borne out in recent instances of senior financial executive failure in the sector.

Details

Accounting, Auditing & Accountability Journal, vol. 32 no. 4
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 October 2001

Paul Favaro

In the traditional executive suite, the chief financial officer’s (CFO’s) role was to keep tabs on the money and then make sense of that information for the board of…

Abstract

In the traditional executive suite, the chief financial officer’s (CFO’s) role was to keep tabs on the money and then make sense of that information for the board of directors, top management, and the investment community. And while the CFO’s fiefdom was large, few ventured beyond these purely financial domains. But times have changed. Today, CFOs must take on dynamic leadership roles in four important areas of the business. First, they have exemplary strategic management capabilities. Second, they are able to provide line management with detailed, real‐time information that improves the quality of strategic decision‐making and execution. Third, they transform the traditional investor‐relations function into a source of competitive advantage. And fourth, their leadership transcends the finance function and carries over into all areas of the company.

Details

Strategy & Leadership, vol. 29 no. 5
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 2 February 2021

Gianluca Ginesti, Rosanna Spanò, Luca Ferri and Adele Caldarelli

This study aims to investigate whether the characteristics of the chief financial officer (CFO) have an impact on the intensity of the corporate research and development…

Abstract

Purpose

This study aims to investigate whether the characteristics of the chief financial officer (CFO) have an impact on the intensity of the corporate research and development (R&D) investment.

Design/methodology/approach

Based on hand-collected data for the CFOs of a sample of the largest European listed companies for the period 2013–2016, this study uses regression analyses to test empirically the association of CFO education, CFO gender and CFO age with R&D investment intensity.

Findings

The presence of female CFOs, CFOs with a Master of Business Administration (MBA) or Doctor of Philosophy (PhD) degree and older CFOs is positively associated with the intensity of R&D investment.

Research limitations/implications

This study relies on some observable characteristics of CFOs and focuses on large listed companies.

Practical implications

The results of this study may help investors, stakeholders and practitioners to understand better which type of CFO characteristics are more likely to result in higher firm-level R&D investment intensity.

Originality/value

This study offers the first insights into the impact of CFOs, as the most prominent C-suite executives, on the level of corporate investments in R&D activity.

Details

Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

Keywords

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Article
Publication date: 7 January 2014

Heather S. Knewtson and John R. Nofsinger

The authors examine whether the stronger information content of chief financial officer (CFO) insider trading relative to that of chief executive officers (CEOs) results…

Abstract

Purpose

The authors examine whether the stronger information content of chief financial officer (CFO) insider trading relative to that of chief executive officers (CEOs) results from a different willingness to exploit the information asymmetry that exists between executives and outside shareholders (scrutiny hypothesis) or from differing financial acumen between CFOs and CEOs (financial acumen hypothesis). The authors consider the information content of equity purchases for CEOs and CFOs. The paper aims to discuss these issues.

Design/methodology/approach

The authors examine purchase-based insider trading portfolio returns before and after the implementation of SOX in firms with high versus low regulation, for routine and opportunistic managers, and in samples of CEOs with prior CFO experience.

Findings

The authors provide evidence that SOX affected executives differently and provide support for the scrutiny hypothesis. CFO-based portfolios remain the most profitable post-SOX, but the magnitude of returns has fallen in absolute and relative terms compared to returns for CEOs. Superior financial acumen of CFOs does not appear to be supported. CEO purchase trade returns appear to be lower than CFO returns because CEOs face greater visibility and scrutiny and thus limit their own trading aggressiveness.

Originality/value

This research contributes to the literature in explaining why CFOs best CEOs in their insider trading purchases and documents that in the post-SOX period, CFO insider trading superiority disappears.

Details

Managerial Finance, vol. 40 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 6 March 2017

Martin R.W. Hiebl, Bernhard Gärtner and Christine Duller

This paper aims to examine the relationship between characteristics of chief financial officers (CFOs) and enterprise resource planning (ERP) system adoption. Following…

Abstract

Purpose

This paper aims to examine the relationship between characteristics of chief financial officers (CFOs) and enterprise resource planning (ERP) system adoption. Following upper echelons theory, the authors theorize that CFO age, education, tenure and recruitment influence ERP system adoption, and that this relationship is moderated by the CFO being responsible for firm-wide information technology (IT) functions.

Design/methodology/approach

The empirical analysis is based on a survey of 296 large and medium-sized Austrian firms. Logistic regression analyses were used to test the association between CFO characteristics and ERP system adoption.

Findings

The authors find that firms with externally recruited CFOs have adopted ERP systems significantly more often than firms with internally promoted CFOs. Surprisingly, the results indicate that firms with less educated CFOs more often adopted an ERP system, and that the relationship between CFO characteristics and ERP system adoption is not moderated by the CFO being responsible for IT.

Research limitations/implications

This paper adds to the literature by corroborating case-based evidence that CFOs and their characteristics influence ERP system adoption. Extending previous research which indicates that CFO characteristics influence accounting practices, the authors show that CFO characteristics also influence technological innovation such as the adoption of ERP systems. Future research on technological innovation may therefore pay closer attention to the influence of CFOs.

Originality/value

This paper is the first to quantitatively test the influence of CFO characteristics on ERP system adoption.

Details

Journal of Accounting & Organizational Change, vol. 13 no. 1
Type: Research Article
ISSN: 1832-5912

Keywords

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Article
Publication date: 26 July 2020

Piotr Bialowolski, Andrzej Cwynar and Dorota Weziak-Bialowolska

The article aims to study the relationship between the assignments of financial management responsibilities and the level of financial literacy within married and…

Abstract

Purpose

The article aims to study the relationship between the assignments of financial management responsibilities and the level of financial literacy within married and cohabitating couples.

Design/methodology/approach

The link between household financial management and the financial literacy of union partners was examined using dyadic survey data. In the dyadic multilevel regression analysis, the financial management process was scrutinized, and two distinct measures of financial literacy (tested and self-assessed) were used as the outcomes in the analysis.

Findings

The extent to which married and cohabitating individuals engage in household financial management was found to positively correlate with their financial literacy. Self-reports about the division of financial management responsibilities were found to be biased with individuals typically overestimating their share in household financial management. Consequently, the status of household financial manager was not as crucial for financial literacy as was the self-perception of engagement in household financial management. Despite the benefits of intrahousehold labor specialization, delegation of sole responsibility for household financial matters may place the person who waives the responsibility at a serious risk of self-exclusion from lifelong financial learning.

Originality/value

The article uses dyadic data (from married and cohabiting couples), which ensures more rigorous and accurate evidence for the link between the household financial management and financial literacy. A novel approach to the analytical treatment of partners' contradictory reports on the role of couple's financial manager is also proposed. The breadth of household financial management is captured by analyzing three stages of the process: proposing, decision-making and implementation of financial solutions or actions.

Details

International Journal of Bank Marketing, vol. 38 no. 6
Type: Research Article
ISSN: 0265-2323

Keywords

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