Do CFOs Matter? Evidence from the M&A Process

66 Pages Posted: 29 May 2020 Last revised: 12 Jan 2021

See all articles by Stephen P. Ferris

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Sushil Sainani

University of Liverpool

Date Written: January 1, 2021

Abstract

This study examines the effect of Chief Financial Officers (CFOs) on mergers and acquisitions using an innovative CFO Influence Index. We use the U.K. for our analysis because the perceived influence of CFOs is high. We find that more influential CFOs as measured by experience, stature, and pay are associated with more deal completions and the pursuit of smaller, domestic targets. High influence CFOs complete their due diligence more quickly and are able to identify higher quality targets for which they pay less. We also discover that firms with high influence CFOs enjoy greater long-term operating and financial performance post-merger. We conclude that influential CFOs are effective in creating shareholder value during M&A, especially when the deal is complex.

Keywords: CFO; mergers; acquisitions; performance

JEL Classification: G3; G34; G4

Suggested Citation

Ferris, Stephen P. and Sainani, Sushil, Do CFOs Matter? Evidence from the M&A Process (January 1, 2021). Journal of Corporate Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3545806 or http://dx.doi.org/10.2139/ssrn.3545806

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance ( email )

214 Middlebush Hall
Columbia, MO 65211
United States
573-882-6272 (Phone)
573-884-6296 (Fax)

Sushil Sainani (Contact Author)

University of Liverpool ( email )

Chatham Street
Liverpool, L69 7ZA
United Kingdom

HOME PAGE: http://www.liverpool.ac.uk/management/staff/sushil-sainani/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
135
Abstract Views
1,121
rank
259,809
PlumX Metrics