The role of CFOs on the boards of Maltese listed entities : implications for corporate governance

Abstract

This paper examines the role of Chief Financial Officers (CFOs) on the boards of Maltese Listed Entities (MLEs). The paper explores how the corporate boards of MLEs prefer to involve CFOs and evaluates the views of board members about the benefits and drawbacks of CFO participation. The study analyzes the broader implications for corporate governance, including the perspectives of directors, managers, and shareholders. Methodology: We adopted a mixed-method approach using semi-structured interviews with 10 board members (BMs) and 16 CFOs from MLEs. In addition, we collected written responses from three BMs and two CFOs, resulting in a total of 31 participants. Results: MLEs tend to favor CFOs as regular board attendees rather than full board members, aiming to ensure robust financial oversight while preserving the independence of managerial oversight. Factors such as the financial literacy of the board and the complexity of the business influence this preference. Boards sometimes appoint CFOs following cooling-off periods, and participants expressed concerns about potential conflicts between current and former CFOs, as well as the challenge of balancing board duties with operational responsibilities. Nevertheless, participants viewed CFO board participation positively. Participants believe CFOs contribute to strategic alignment, deeper managerial insight, and enhanced shareholder confidence when they participate on boards. While small shareholders expressed minimal concern, institutional investors placed a stronger value on CFO involvement. Originality / value: This study fills a gap in the corporate governance literature by examining the specific contributions and oversight roles of CFOs within the boards of Multinational Listed Entities (MLEs), an area that has received limited academic attention. Practical implications: The findings guide MLEs and other listed firms in designing CFO involvement in board processes and balancing effective financial oversight with good governance practices. Theoretical implications: This study contributes to corporate governance theory by illustrating how CFOs play a distinctive role in board structures, particularly in contexts where companies must balance financial expertise with administrative independence. It deepens understanding of how CFO involvement shapes decision-making dynamics, strategic oversight, and the evolution of governance models in smaller capital markets.