Expat CFOs Improve Reporting, Study Says, But Maybe Only In Europe

A Bocconi University analysis shows that a foreign CFO is likely to add a layer of investor protection. While anecdotal reports support this, the view from emerging markets suggests the global reality is not so straightforward.


CFOs operating within foreign businesses can have a major, and generally positive, impact on the quality on the company’s financial reporting, according to a new study.

The working paper analyzes Euro Stoxx 600 companies from 15 countries for the impact C-suite executives have on businesses where the culture is different from their own.

CFOs having a distinctive managerial style developed in their own, native countries positively affects the quality of the financial reporting. “

“CFOs having a distinctive managerial style developed in their own, native countries positively affects the quality of the financial reporting in the company where they operate,” says Antonio Marra of Bocconi University in Milan, who led the research. He also says that foreign CFOs often produce superior accounting documents when compared to their home-grown counterparts.

The report correlates with the first-hand experience of CFOs who have worked overseas.The impact of the expat CFO can also depend on nationality.

Marra, an assistant professor of accounting at Bocconi, says CFOs who come from countries that are more oriented towards the protection of investors, then move to countries where investor protections are weaker, have a greater positive impact on the quality of the financial data reported. In the reverse scenario, however, there is less of an impact. Madrian also stresses the importance of individual qualities.

Jens Madrian, Reactive Technologies
Jens Madrian, Reactive Technologies

“The bestqualitiesI findare genuinecuriosityand connectivity,” Madrian explains. “You need to be able, as anexpatCFO, to embrace your new cultural and contextual environment,effectivelyconnect to that and to communicate in an impactful way.”

Madrian also underscores the importance of context, noting that expat CFOs are often most effective when the business is growing: “This is the point where you can play the crucial value-adding role as aCFOby connecting the different World’s and leveraging these advantages for the benefit of the wider group.”

According to India Economic Times, an analysis of the country’s top 20 business houses found that more than half resigned prematurely. In many cases, the biggest pain points are cultural mismatch, lack of clarity on job profile, poor delegation of authority and lack of process and structures related to promotions.

arrow-chevron-right-redarrow-chevron-rightbutton-arrow-left-greybutton-arrow-left-red-400button-arrow-left-red-500button-arrow-left-red-600button-arrow-left-whitebutton-arrow-right-greybutton-arrow-right-red-400button-arrow-right-red-500button-arrow-right-red-600button-arrow-right-whitecaret-downcaret-rightclosecloseemailfacebook-square-holdfacebookhamburger-newhamburgerinstagramlinkedin-square-1linkedinpauseplaysearch-outlinesearchsubscribe-digitalsubscribe-printtwitter-square-holdtwitter