+1 862 207 3288 Assignment Overview
Due to the increasingly complex nature of corporate finance, more and more corporations are tapping their chief financial officer to become
their chief executive officer. The CFO brings substantial financial expertise to the position of CEO. However, there may be other reasons why
the CFO is not necessarily the best person to become the CEO.
Please note that the CFO must have an external orientation: After all, the company is owned by its shareholders and if the company is to
operate so as to raise the value of the shares it must consider not only the internal structure of the organization, its products,
competitors etc., but it must consider the interaction between what the company ‘does’, and the way the ‘market’ evaluates its performance.
It is the combination of the two that plays a role in affecting the market price of the shares and shareholders value. The individuals who
must have an eye on this are usually the CEO and the CFO.
Please read the articles below, which are both available in Proquest. You need to click ‘ADDIONAL LIBRARY RESOURCES’ under the title of
Online Library in the TLC Portal in order to access the links.
How a CFO can graduate to CEO
Corporate Finance; London; Jun 1999; Janine Brewis
Abstract: Positions of power within corporates are highly sought after, and today’s chief financial officers and finance directors are
increasingly becoming aware that they now have a realistic opportunity of becoming CEO. Part of the reason for the trend towards recruiting
CFOs who can behave as strategic partners is that the investor community looks much more critically at the business performance and
management strengths and weaknesses of corporates. This strategic positioning gives them an opportunity to buff up their image, and make
themselves seen as a more credible candidate to take over the CEO role.
Do CFOs Really Make Good CEOs
Institutional Investor; New York; Aug 1989; Picker, Ida
Abstract: With the proliferation of corporate takeovers, leveraged buyouts, and restructuring in the US, it would seem that chief financial
officers (CFO) hold the keys to executive wisdom. Recruiters report a growing trend of grooming CFOs for chief executive officer (CEO)
positions, with some estimating that nearly 25% of top corporate leaders are former CFOs. Analysts, academics, and headhunters agree that the
ideal CEO communicates well, is adept at managing managers, understands the company’s product and operations, and provides a consistent
vision. A recent survey by Management Practices Quarterly reveals that, of 83 new CEOs appointed in 1988, more than 18% came from
operations-production backgrounds, some 23% had technical training, while only 14.4% had a financial background. D. Wayne Calloway, who
became CEO of PepsiCo in May 1986, was formerly the company’s CFO and is probably the best example of the valuable experience CFOs can bring
to the CEO position.
Assignment Expectations
Read the two articles above, look for newer articles on the subject by browsing the web and then write a two-page paper answering the
following question:
Do you think finance departments are the best place to train future CEOs? Provide two actual examples of CFOs of publicly-traded companies
who became CEOs of publicly-traded companies within the past 5 years. Do these individuals have the CPA and/or CFA designations?
Include a discussion of both the pros and cons of hiring a CFO to be CEO. Try to cite at least three articles in your paper in support of
your arguments in favor of and against hiring a CFO to be a CEO. Remember to include a reference list and to refer to the articles you use in
the body of your paper.
