A profession in change: Chief financial officers’ characteristics and backgrounds in large German companies

Jan Endrikat,Julia Hillmann,Max Kieslich

doi:10.22495/cocv18i1art9

Abstract

Growing competition, increasing uncertainty, globalization, and deregulation made the nature of what companies do increasingly complex, and especially corporate accounting has become more and more important. This has put chief financial officers (CFOs) on the spot and into a key leading position. This paper commences by briefly reviewing extant empirical findings on CFO characteristics and their effects on firm processes and outcomes. Then, it investigates how the profession of the CFO has changed over time by analyzing changes in demographic characteristics and professional backgrounds of CFOs of German DAX companies over the past 20 years. The findings show changes in the CFO profession specifically with regard to CFO appointment age, professional experience (i.e., breadth of non-company and non-industry lifers, hiring of company and industry outsiders), and educational background (i.e., the role of educational level). Furthermore, the results for DAX CFOs are compared to data pertaining to the CFOs of midcap companies (i.e., MDAX). The respective analyses indicate a noticeable difference with regard to appointment age, professional experience (i.e., work experience, percentage of company-lifers, international experience), and educational level.

Highlights

For several years the profession of the chief financial officer (CFO) is gaining more and more importance as highlighted for instance by the latest survey by the Hays Group on the development of executive and top management positions (FINANCE, 2018)
In 2018, only four DAX companies (13%) have a female CFO. This is an increase compared to the years 2008 and 1998 – as none of the DAX companies had a female CFO (Simone Menne, the first female CFO in a DAX company, was appointed as CFO at Lufthansa AG in 2012) – this progress might represent the first changes due to the resolution of a female quota of 30 percent within top management positions issued in 2015 and is likely to increase in the future
This paper was motivated by the increasing importance and the changed role of CFOs and by the burgeoning research endeavors acknowledging the importance of individual characteristics of CFOs in determining firm processes and outcomes

Summary

Introduction

The profession of the chief financial officer (CFO) is gaining more and more importance as highlighted for instance by the latest survey by the Hays Group on the development of executive and top management positions (FINANCE, 2018). Growing competition, increasing uncertainty, globalization, and deregulation make corporate actions and especially corporate accounting more complex, which has put CFOs on the spot and into a key leading position (Aier, Comprix, Gunlock, & Lee, 2005; Liesman, 2002). Along these lines, the roles of CFOs have changed “[...] from bean counters to spin doctors”

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