| CFO as the maker of corporate strategic decisions,the leader of the financial management and financial governance,and the leader of capital management and capital operation,plays a major role in responding to corporate strategic transformation,investment decisions,financing schemes,capital operations,and major corporate decision-making events.CFO is enterprise value management,the hub of value creation and risk management,the strategic partner of the CEO,is also an effective carrier for using financial contract tools to coordinate and solve agency problems in corporate governance,under the modern corporate governance framework,plays the role of financial supervision and strategic support,and conducts strategic decision-making and company management with the maximization of shareholder value as the guide.The role of CFO gradually changed from a traditional financial expert to a strategic expert integrating financial management,corporate strategic decision-making,and risk management.It is one of the key factors in the modern governance system of various enterprises and administrative institutions.Former Minister of Finance Mr.Lou Jiwei once said that the CFO as a core management member of an enterprises,should assist the senior executives to make reasonable decisions.Among them,CFO core competence is the basis for achieving the functional objectives of the CFO,and is the key to determining whether it can fulfill the duties assigned by the enterprise and achieve the long-term development goals of the enterprise.Financial decision-making is the core system of corporate strategic decision-making and financial management.How to adjust corporate financial policies and financial behaviors in a complex and changeable competitive environment,how to raise sufficient funds at low cost to meet the needs of corporate survival and development,how to formulate scientific and effective financial flexibility reserves strategies to properly adjust and supplement this "reservoir" to resist the risks caused by environmental uncertainty and maintain the continuity of corporate funds in order to respond flexibly to potential investment opportunities and possible adverse shocks and avoid financial distress,It has become an important issue and key link in the survival and development of enterprises.Contingency finance theory believes that uncertainty is a distribution function of state,behavior,and results.The uncertainty of the environment makes the financial entity of the enterprise to keep the financial operation system and the financial environment in a dynamic coordination,and it is precisely because of the inevitable environmental uncertainty that makes the financial flexibility of the enterprise more valuable.Financial flexibility has become one of the core competitiveness of enterprises to control the capital market.It is an important measure for enterprises to implement risk management.Maintaining a reasonable level of financial flexibility has become a common financial policy and strategic choice for enterprises.There is a well-known saying in the risk control community that uses risk management to grasp the uncertainty of the environment,internal control to enhance the certainty of the enterprises,and corporate governance to enhance the stability of the enterprises.Throughout the existing research on financial flexibility,most of them have focused on the impact of financial flexibility on corporate investment and financing behavior decisions,and rarely consider the role of core executives.Moreover,with the background of corporate executives,this article focuses on the role of CFO,reducing the research noise caused by different powers.Starting from the CFO's role in corporate management and corporate governance,on the basis of sorting out and defining CFO,core competence,and financial flexibility,it focuses on the impact of CFO core competence on financial flexibility decisions.To put it simply,CFO core competence is the basis for fulfilling its function fulfillment goals,that is,"CFO core competence can help it perform its duties and effectively perform its financial supervision and strategic support functions,so as to better serve the healthy development of the enterprises on the right track".On the one hand,the CFO helps to alleviate the ineffective allocation and use of resources between fund providers and enterprises,which is beneficial to alleviate the agency problem caused by information asymmetry between the company and external investors,thereby reducing the company's future financing costs and improving the company Governance efficiency;on the other hand,the CFO dominates the company's financial operation system,and the focus is on the company's financial flows.It is most aware of the company's financial risks,costs,and value.By improving investment efficiency,it can obtain potential cash flow in the future,reduce financial risks,and achieve corporate financial strategy.With its ability and position,CFO can provide more financing channels,help companies obtain external financing at a lower cost,ease financing constraints,improve financing efficiency,and ultimately improve the efficiency of corporate capital allocation.To this end,this article follows the logical review of the research literature review,concept definition,institutional background,research objectives,and theoretical basis,the impact of CFO core competence on financial flexibility,impact mechanisms,economic consequences,research conclusions,and policy recommendations.Analytical methods,empirical research analysis methods,and scientific knowledge atlas analysis methods,etc.,closely discuss and reason about the research content.The details are as follows:First,through the construction of relevant theoretical models,the impact of CFO core competence on financial flexibility decision is analyzed.This paper selects the data of A-share listed companies from 2009 to 2018 in Shanghai and Shenzhen stock market as the research sample,and conducts an empirical test on it.Then,from the perspective of product market and capital market,introduce the cross-sectional characteristics of the enterprise and embed it in the research of CFO core competence affecting the financial flexibility of the company.Finally,we systematically examine the research on the economic consequences of CFO core competence on corporate financial flexibility decisions.Based on the perspective of the competitive and value effects of corporate financial flexibility,we examine the impact of CFO core competence on corporate financial flexibility competitive and value effects.Through the above research,this article draws the following main conclusions:First,the CFO core competence is inversely related to the financial flexibility level of the company,that is,companies with stronger CFO core competence tend to reserve a lower level of financial flexibility;compared to non-state-owned enterprises,CFO core competence of state-owned enterprises the negative impact of capacity strength on financial flexibility is more significant,mainly due to the special status and function of the CFO(Chief Accountant)of state-owned enterprises,which is greatly affected by the core competence of the CFO when making financial flexibility decisions;in different divisions,the study found that when listed companies face more severe financing constraints and better investment opportunities,the negative impact of CFO core competence on the level of corporate financial flexibility is more significant;CFO core competence has a greater impact on debt financing flexibility,the more obvious the negative impact effect,the CFO with stronger core competence can indeed reduce the level of corporate financial flexibility by easing corporate agency conflicts and financing constraints.Second,from the perspective of product markets and capital markets,introduce the factors of enterprise cross-sectional characteristics(product market position and financing constraints)to theoretically analyze the impact of these factors on CFO core competence and financial flexibility decisions.The competitive position of the product market plays a regulatory effect between the CFO core competence and financial flexibility.When the company's product market position is high,the CFO core competence has higher external financing capabilities,which reduces the company's financial flexibility and weakens the enterprise obtain financial flexibility through cash holdings;financing constraints play an intermediary transmission mechanism between CFO core competence and financial flexibility.The CFO core competence and financing constraints are both influencing factors of financial flexibility.In the process of affecting corporate financial flexibility,financing constraints as an intermediary variable affect the financial flexibility of enterprises.Third,it examines the impact of CFO core competence on the competition effect and value effect of corporate financial flexibility decisions.In terms of the competitive effect of financial flexibility decisions,corporate financial flexibility policies have a market competition effect,that is,the financial flexibility of enterprise reserves on the market performance of enterprises have a significant positive impact.The strength of CFO core competence has a significant strengthening effect,that is,as the strength of CFO core competence increases,the competitive effect of corporate financial flexibility decisions shows a decreasing trend;in terms of the value effect of financial flexibility decision-making,there have been studies that consider the financial flexibility of reserves there is a positive effect on corporate value,and it is more pronounced during the crisis,but it also has a negative effect.This article describes a comprehensive model that weighs financial flexibility benefits and costs,and proposes a nonlinear relationship model between financial flexibility and corporate value,the test found that the improvement of the level of financial flexibility within a reasonable range is conducive to enhancing the value of the enterprise.When a certain critical value is exceeded,the financial flexibility has a negative impact on the value of the enterprises.That is,the influence of financial flexibility on the value of the enterprises is not static and simple linear,but an inverted U-shaped curve relationship,the impact of financial flexibility on the value of the enterprises first rises and then falls.Fourth,the two major markets,product market and capital market,are important strategic considerations for enterprises when making financial decisions.Whether it is the market competition effect or the value effect brought about by financial flexibility decision-making,it shows that financial flexibility can create value for enterprises.However,financial flexibility is a "double-edged sword",not the bigger the better.According to the principal agent theory,the enterprise holds excessive cash will increase cash holding costs,and keeping debts too low will also bring debt financing costs.Too high level of financial flexibility will lead to excessive reserve costs,which will occupy capital resources for enterprise development.To some extent,it is not conducive to the sustainable growth of enterprises.Enterprises with stronger CFO core competence tend to reduce the level of financial flexibility reserves,restrain the negative impact of excessive financial flexibility reserves on corporate value,and actively maximize the value of financial flexibility.In general,this article explores the impact of CFO core competence on corporate financial flexibility decision-making.While enriching relevant theories,it deepens the understanding of the effect of CFO core competence on corporate financial flexibility decision-making and expands the traditional financial flexibility decision-making view of economic consequences.Specifically,this article has the following innovations and research contributions:First,it further enriches the research results and research literature on CFO core competence,and financial flexibility,and provides a new perspective for research in such fields.Previous research directions on CFO were mostly earnings quality,corporate performance,investment and financing,dividend policy,stock price crash,etc.There is no literature on the impact of CFO core competence on corporate financial flexibility decisions.This article will provide research experience and incremental evidence for the role of CFOs in corporate governance and corporate management.Second,this article is based on theories such as "competence theory","upper echelon theory","information asymmetry theory",and "principle agent theory",this article verifies the impact of CFO core competence on corporate financial flexibility decisions,which is important for improving corporate risk awareness.The significance of the enlightenment and the ability to serve as the CFO also provide corresponding guidance for the corporate to appoint CFO part-time directors,which will effectively promote the establishment and implementation of internal control of the corporate,so as to effectively improve the corporate governance of the corporate.Third,under the current institutional background of our country,this article considers the moderating role of corporate cross-sectional characteristics such as the market position of the enterprise's products,the degree of financial constraints,and other factors on the core competence of the CFO and the financial flexibility of the corporate.Competency affects the specific action mechanism and system conditions of an enterprise's financial flexibility decision,which completes and supplements the research framework of financial flexibility.Fourth,systematically examine the research on the economic consequences of CFO core competence on corporate financial flexibility decisions.Based on the perspective of the competitive and value effects of corporate financial flexibility,it not only confirms the impact of CFO core competence on corporate financial flexibility competition and value.It also helps to deeply analyze the impact and mechanism of corporate financial flexibility decisions on product market competition and corporate value,and enriches the relevant literature on the influencing factors of financial consequences of financial flexibility decisions.In this paper,some new insights and new findings on the impact of CFO core competence on corporate financial flexibility decisions have important reference value for the formulation and improvement of the CFO system and related laws and regulations.At the national level,the CFO corporate governance system should be designed at the top level,perfecting modern corporate systems and corporate governance structure practices,and enriching corporate governance theories and related financial management theories have important theoretical value. |
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