From CFO to CEO

Paper Summary:

This paper takes a look at the growing trend to promote the company CFO to the position of CEO. Over the past 18 months an increasing number of company boards have decided that this transition would best serve their shareholders. Traditionally, however, there were few CFOs who were aiming for the top job and even fewer shareholders who would consider appointing them.

From the Paper:

"There are many reasons for which companies could appoint former CFOs as chief executive officers. Their financial expertise and market approach, their prudent manner to take on new challenges and the well supported arguments of their investment decisions are definite advantages. There are two qualities required from someone reaching the position of CFO: a comprehensive knowledge of finance and internal controls and an understanding of the operational and commercial aspects of business. These attributes are also demanded for CEOs.
The strong financial background is an important quality. Nick McCall, chair of the London chapter of The Financial Executives Networking Group (Feng), cited in one article published in Corporate Finance, April 2005, explains that: "Business is becoming increasingly complex - and deal making highly technical - [so] CEOs need to have a sound financial background."

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