Having a Chartered Accountant (CA) as Chief Financial Officer (CFO) can help enhance corporate performance, according to a recent study from the Canadian Institute of Chartered Accountants (CICA).
“Once again this year our analysis indicated that companies with CAs in leadership positions, such as CFO, are rewarded with better corporate performance,” CICA President & CEO David Smith, FCA said in a prepared statement announcing the findings.
Each year the CICA reviews the positions of Chariman, Chief Executive Officer (CEO), president, CFO, Chief Operating Officer (COO) and corporate secretary at companies in the Globe and Mail’s Report on Business(TM) (ROB) 1000 magazine to determine how many senior positions are held by CAs. The CICA reports also review the financial performance of this group of 1000 largest publicly-traded Canadian corporations to assess the relative performance of companies with CFOs who are CAs.
The CICA study found that companies that have a CA in the CFO position outperformed their counterparts on several key measures, such as return on equity, return on capital and return on assets. For companies that had a CA in the CFO position, the average return on capital over the past five years was 5.4 percent, compared to -0.16 percent for companies that did not have a CA in the CFO position. Return on assets over the same five-year period was 4.6 percent for companies with a CA in the CFO position, versus 0.8 percent for those that did not.
In terms of actual numbers, CAs dominated the CFO position in the ROB 1000 Companies list, accounting for 58 percent of all CFOs. The percentage of CFOs who are CAs in top companies listed by the ROB annually, has risen steadily over the past five years.
The study also showed that in 2005, one in four top officers (23 percent) in the ROB 1000 were CAs. When looking more broadly at the leadership positions within the ROB 1000, 61 percent of ROB 1000 companies had a CA in at least one of their top six positions (Chairman, CEO, president, CFO, COO and/or corporate secretary). In total, CAs accounted for 12.6 percent of the list of Chairman, 9.8 percent were CEOs, 10 percent were presidents, 17 percent were corporate secretaries and 8.2 percent were COOs.
“Canada’s Chartered Accountants continue to be in strong demand for their financial expertise, business insight and strategic thinking and because they are values-oriented leaders who make strong contributions to management teams,” Smith said. “We are very proud of our membership for playing such influential, leadership roles in Canadian business.”
The Canadian Institute of Chartered Accountants (CICA), together with the CA institutes/ordre, represents approximately 70,000 CAs and 8,500 students in Canada and Bermuda.