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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…
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.
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.
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.
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.
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.
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.
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.
The purpose of this paper is to report the findings of a study designed to understand how involved controllers are in management decision processes, what causes more or…
The purpose of this paper is to report the findings of a study designed to understand how involved controllers are in management decision processes, what causes more or less involvement in those processes, and whether involvement is significantly associate with performance.
To test the research propositions developed from a review of prior literature, data were collected from large Italian corporations using a questionnaire survey.
The results show that most of the controllers are at least somewhat involved in management decision processes, and some are highly involved. A complex set of factors determine the extent and breadth of controller involvement. Controller involvement in either strategic decisions, operating decisions, or both types of decisions is positively related to some situational variables, including capital intensity, operating interdependency, line managers' financial competence, formalization of strategic planning and budgeting processes. It is negatively related to the use of controller positions as training for line roles. Overall, controller involvement was found to be positively associated with performance.
This study provides support for some prior research findings and some extension of prior theory. Some findings were not consistent with expectations. This study was based on a small sample – 17 organizations; it used some crude measures and scales; and the findings can be generalized reliably only to the population studied here – large Italian industrial firms. More research is needed for further tests and explorations of these findings.
This research supports modern advice given to involve controllers highly in management decision‐making processes, but it also refines that advice by showing where high involvement is more (or less) desirable.
These results provide some useful support of prior findings and some modifications and extensions that further our understanding in this area of importance both to researchers and practitioners.