The CEO-CFO relationship in Maltese public-interest entities : a study

Abstract

Purpose: The study aims to understand what CEOs of Maltese PIEs expect from their CFOs, and to establish whether such expectations are being met. The study also analyses whether the CEO-CFO relationship in Maltese PIEs takes the form of a pilot/co-pilot relationship or that of a partnership of equals. Finally, this dissertation focuses on the implications of a strong CEO-CFO relationship, any obstacles the pair may face and factors that enhance this relationship. Design: To address the research objectives, a literature review was conducted to gather secondary data from foreign and local authors. Additionally, primary data was collected from thirteen semi-structured interviews with active and former CEOs and CFOs of Maltese PIEs. Findings: The findings show that despite focusing primarily on their traditional finance roles, CFOs are indeed dedicating a significant amount of time to strategic functions, as expected by CEOs. Furthermore, a healthy CEO-CFO relationship, which is more likely to be a pilot/co-pilot relationship, has positive implications for CEOs, CFOs and the firm’s performance and financial value. While CEO-CFO closeness can prevent the relationship from working as intended, factors such as CEO-CFO personality differences and open discussion enhance the relationship. Conclusion: In their CFO, CEOs seek a qualified and experienced person of integrity who is capable of: understanding, supporting and challenging them, complementing their skillset, leading and of communicating effectively. The study also concludes that it is essential that the two properly manage this critical corporate relationship, as it can be a significant factor in whether the organisation is successful. Value: With finance professionals increasingly assuming high management positions, it is anticipated that this research will give finance professionals a strong insight into a critical relationship they may sometime play a role in.