HOW FIRM SIZE SHAPES THE CFO ROLE IN TÜRKİYE: EVIDENCE FROM LARGE AND SME FIRMS

Abstract

This study examines whether companies include a chief financial officer (CFO) position in their top management and whether CFO characteristics differ based on the firm size. To this end, as of January 2024, the study analyzed a total of 76 companies, including all firms listed on the Borsa İstanbul BIST 30 (XU030) index (n = 30) and all small and medium-sized enterprises (SMEs) listed on the BIST SME Industrial (XKOBI) index (n = 46). The data were analyzed using content analysis. In line with their firms’ global and strategic demands, CFOs in large-scale companies also tended to have postgraduate or doctoral degrees, international experience, and advanced qualifications. On the other hand, XKOBI companies were less likely to appoint a CFO compared to large firms. Notably, a considerable number of these SMEs had no accounting or finance leader in their top management. The research findings not only serve as a foundation for academic studies but also provide guidance for executive education programs and corporate governance reforms.

Keywords

• Chief Financial Officer
• CFO Career
• Accounting Profession
• CPA
• Accounting Education

Supporting Institution

The author declared that this study has received no financial support.

HOW FIRM SIZE SHAPES THE CFO ROLE IN TÜRKİYE: EVIDENCE FROM LARGE AND SME FIRMS

Abstract

Bu çalışmada, şirketlerin üst yönetimlerinde bir mali işler direktörü (CFO) pozisyonuna yer verilip verilmediği ve CFO özelliklerinin şirket büyüklüğüne göre farklılık gösterip göstermediği incelenmiştir. Bu amaçla, Ocak 2024 tarihi itibarıyla Borsa İstanbul BIST 30 (XU030) endeksinde işlem gören tüm şirketler (n = 30) ve BIST KOBİ Sanayi (XKOBİ) endeksinde işlem gören tüm küçük ve orta ölçekli işletmeler (KOBİ'ler) (n = 46) olmak üzere toplam 76 şirket analiz edilmiştir. Veriler içerik analizi kullanılarak analiz edilmiştir. Şirketlerinin küresel ve stratejik talepleri doğrultusunda, büyük ölçekli şirketlerdeki CFO'ların ayrıca lisansüstü veya doktora derecesine, uluslararası deneyime ve ileri düzey niteliklere sahip olma eğilimi gösterdiği görülmüştür. Diğer yandan, XKOBİ şirketlerinin büyük şirketlere kıyasla bir CFO atama olasılığı daha düşüktür. Bu KOBİ'lerin önemli bir kısmının üst yönetimlerinde muhasebe veya finans lideri bulunmaması dikkat çekicidir. Araştırma bulguları yalnızca akademik çalışmalar için bir temel oluşturmakla kalmayıp aynı zamanda yönetici eğitim programları ve kurumsal yönetim reformları için de rehberlik sağlamaktadır.

Keywords

• Mali İşler Direktörü
• CFO Kariyer
• Muhasebe Mesleği
• SMMM
• Muhasebe Eğitimi

Supporting Institution

Yazar bu çalışma için finansal destek almadığını beyan etmiştir.

Ethical Statement

Araştırma Etik Kurul Onayı gerektirmemektedir.

References

1. Aier, J. K., Comprix, J., Gunlock, M. T., and Lee, D. (2005) “The Financial Expertise of CFOs and Accounting Restatements”. Accounting Horizons, 19(3): 123–135. https://doi.org/10.2308/ACCH.2005.19.3.123.
2. Anderson, C. W., Babajide Wintoki, M., and Xi, Y. (2024) “CFO Social Capital, Liquidity Management, and the Market Value of Cash”, Journal of Banking & Finance, 163, 107163. https://doi.org/10.1016/J.JBANKFIN.2024.107163
3. Caglio, A., Dossi, A., and Van der Stede, W. A. (2018) “CFO Role and CFO Compensation: An Empirical Analysis of Their Implications”, Journal of Accounting and Public Policy, 37(4): 265–281. https://doi.org/10.1016/J.JACCPUBPOL.2018.07.002
4. Chahyadi, C. S., and Abusalim, B. (2011) “The Role of Education and Experience in CFO Career and Compensation”, (Vol. 14). Retrieved from http://thekeep.eiu.edu/business_fac/14
5. Condie, E., Obermire, K., Seidel, T. A., and Wilkins, M. S. (2021) “Prior Audit Experience and CFO Financial Reporting Aggressiveness”, SSRN Electronic Journal. https://doi.org/10.2139/SSRN.3365031
6. Dauth, T., Pronobis, P., and Schmid, S. (2017) “Exploring the Link Between Internationalization of Top Management and Accounting Quality: The CFO’s International Experience Matters”, International Business Review, 26(1): 71–88. https://doi.org/10.1016/J.IBUSREV.2016.05.007
7. Datta, S., and Iskandar-Datta, M. (2014) “Upper-echelon Executive Human Capital and Compensation: Generalist vs Specialist Skills”, Strategic Management Journal, 35(12): 1853–1866. https://doi.org/10.1002/SMJ.2267
8. Deloitte. (2019, April) “Finance 2025. Are You Ready?”, https://www2.deloitte.com/tr/en/pages/finance-transformation/articles/finance-transformation-articles0.html, (3.09.2024).

9. Endrikat, J., Hillmann, J., and Kieslich, M. (2020) “A Profession in Change: Chief Financial Officers’ Characteristics and Backgrounds in Large German Companies”, Corporate Ownership and Control, 18(1), 110. https://doi.org/10.22495/COCV18I1ART9
10. Ge, W., Matsumoto, D., and Zhang, J. L. (2011) “Do CFOs Have Style? An Empirical Investigation of the Effect of Individual CFOs on Accounting Practices”, Contemporary Accounting Research, 28(4): 1141–1179. https://doi.org/10.1111/J.1911-3846.2011.01097.X
11. Ginesti, G., Spanò, R., Ferri, L., and Caldarelli, A. (2021) “The Chief Financial Officer (CFO) Profile and R&D Investment Intensity: Evidence from Listed European Companies”, Management Decision, 59(13): 99–114. https://doi.org/10.1108/MD-05-2020-0650/FULL/PDF
12. Hambrick, D. C., and Mason, P. A. (1984) “Upper Echelons: The Organization as a Reflection of Its Top Managers”, The Academy of Management Review, 9(2), 193. https://doi.org/10.2307/258434
13. Harymawan, I., Minanurohman, A., Nasih, M., Shafie, R., and Ismail, I. (2023) “Chief Financial Officer’s Educational Background from Reputable Universities and Financial Reporting Quality”, Journal of Accounting and Organizational Change, 19(4): 566–587. https://doi.org/10.1108/JAOC-12-2021-0195/FULL/PDF.
14. Hiebl, M. R. W., Neubauer, H., and Duller, C. (2013) “The Chief Financial Officer’s Role in Medium-Sized Firms: Exploratory Evidence from Germany”, SSRN. Ournal of International Business and Economics, 13(2), 83.
15. Hu, Q., Bhuiyan, M. B. U., and Houqe, M. N. (2024) “CFO Demographics and Working Capital Management in China”, Journal of Emerging Market Finance, 23(1): 56–82. https://doi.org/10.1177/09726527231190692.
16. Huang, J., and Kisgen, D. J. (2013) “Gender and Corporate Finance: Are Male Executives Overconfident Relative to Female Executives?”, Journal of Financial Economics, 108(3): 822–839. https://doi.org/10.1016/J.JFINECO.2012.12.005.
17. Indjejikian, R., and Matějka, M. (2009) “CFO Fiduciary Responsibilities and Annual Bonus Incentives”, Journal of Accounting Research, 47(4): 1061–1093. https://doi.org/10.1111/J.1475-679X.2009.00343.X.
18. Ismail, I., Shafie, R., and Ku Ismail, K. N. I. (2021) “ CFO Attributes and Accounting Conservatism: Evidence from Malaysia”, Pacific Accounting Review, 33(4): 525–548. https://doi.org/10.1108/PAR-07-2020-0088/FULL/PDF.
19. Khalid, F., Naveed, K., He, X., and Ye, C. (2022) “Impact of Chief Financial Officer’s Experience on the Assurance of Corporate Social Responsibility Reports in China”, Society and Business Review, 17(4): 613–635. https://doi.org/10.1108/SBR-10-2021-0190/FULL/PDF.
20. Korn Ferry. (2019) “Age and Tenure in the C-Suite”, https://www.kornferry.com/about-us/press/age-and-tenure-in-the-c-suite, (14.01.2025).
21. Li, P., Song, C., Wang, J. J., and Zheng, H. (2022) “CFOs’ Audit Experience and Corporate Disclosure Quality: Evidence from China”, Accounting and Finance, 62(3): 4013–4039. https://doi.org/10.1111/ACFI.12914.
22. Luo, J. hui, Peng, C., and Zhang, X. (2020) “The Impact of CFO Gender on Corporate Fraud: Evidence from China”, Pacific-Basin Finance Journal, 63, 101404. https://doi.org/10.1016/J.PACFIN.2020.101404.
23. Meyer-Doyle, P. (2012) “How Do Firms Become Good Acquirers? Managerial Learning and the Acquisition Capability of Firms”, in Academy of Management Annual Meeting Proceedings, 2012(1), 13811. https://doi.org/10.5465/AMBPP.2012.116
24. Nasution, D., and Jonnergård, K. (2017) “Do Auditor and CFO Gender Matter to Earnings Quality? Evidence from Sweden”, Gender in Management, 32(5), 330–351. https://doi.org/10.1108/GM-06-2016-0125.
25. PwC. (2023) “What’s Important to CFOs in 2024: PwC”, https://www.pwc.com/us/en/executive-leadership-hub/cfo.html, (3.09.2024).
26. Redon, M. (2021) “The Evolution of CFO Career Paths in Light of the Financialization of Organizations”, Accounting Auditing Control, 27(2): 7-39.
27. Schäffer, U., Büttner, V., and Zander, K. (2008) “CFO-Karrieren im Wandel”, Controlling and Management, 52(6): 375–382. https://doi.org/10.1007/S12176-008-0113-5.
28. Sellers, R. D., Fogarty, T. J., and Parker, L. M. (2016) “How Important is the Educational Capital of Chief Financial Officers? An Examination of Educational Credentials in the Context of Other Attributes”, Global Perspectives on Accounting Education, 13.
29. Schumann, F., Thun, T. W., Dauth, T., and Zülch, H. (2023) “Does Top Management Team Diversity Affect Accounting Quality? Empirical Evidence from Germany”, Journal of Management and Governance, 28(1): 137–175. https://doi.org/10.1007/S10997-023-09668-7
30. Sun, L., Johnson, G., and Rahman, F. (2015) “CFO Financial Expertise and Corporate Governance Concerns: Evidence from S and P SmallCap 600 Index”, International Journal of Law and Management, 57(6): 573–581. https://doi.org/10.1108/IJLMA-08-2014-0048.
31. Woollacott, E. (2024) “What is a Chief Financial Officer? CFO Role Explained”, https://www.forbes.com/sites/emmawoollacott/article/chief-financial-officer-cfo/, (15.09.2024).
32. Yu, M. (2021) “Study on the Influence of CFO Characteristics on Accounting Conservatism of Listed Companies”, E3S Web of Conferences, 275. https://doi.org/10.1051/E3SCONF/202127503005.
33. Zehnder, E. (2024) “CFO Competencies, Skills, and Potential: The New Playbook”, https://www.egonzehnder.com/functions/cfo-audit-chair/insights/the-new-playbook-of-cfos, (3.09.2024).
34. Zoni, L., and Pippo, F. (2017) “CFO and Finance Function: What Matters in Value Creation”, Journal of Accounting and Organizational Change, 13(2): 216–238. https://doi.org/10.1108/JAOC-12-2014-0059.
35. Zorn, D. M. (2004) “Here a Chief, There a Chief: The Rise of the CFO in the American Firm”, American Sociological Review, 69(3): 345–364. https://doi.org/10.1177/000312240406900302.