Thesis: Advantages of CFO becoming CEO

Sample Thesis Paper

The other advantage of CFO becoming CEO is that they focus on shareholder value. An executive from a marketing background may focus only on growth whereas one from operations background may lay emphasis on cost but a former CFO who has an understanding and experience of the organization would have a broader perspective and would look at multiple levers. A study by Capital IQ showed that large companies that were managed by former CFOs had a 41% return compared to a 29% return on the S&P500 market index (Durfee, 2005).

Former CFOs are able to communicate in a way that is comprehensible and appreciated by investors. As businesses become more global and complex having financial expertise assists not only in understanding issues of capital allocation but also aids in using appropriate financial products. Recessions, dot com failures, corporate scandals have made CFOs suitable candidates for the CEO role. CFOs also have the skills to identify risks, quantify their impact on the organization and take measures to minimize risks. CFOs are generally reactive but the more proficient ones are forward looking, a skill valued in a CEO (Durfee, 2005).

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