The Empirical Study On CFO Financial Executive Force, The Inefficient Investment And Enterprise Value

It’s known that maximum of enterprise value is always the goal for all shareholders and operators. Therefore, such issues as factors influencing enterprise value and how to enhance enterprise value to the utmost have always been regarded as key points by scholars. The thesis tries to make a research on influences of CFO’s financial executive force on enterprise value from a perspective of enterprise’s board of directors. That’s to say, it reveals how CFO shows the impact on enterprise value through managing investment decision-making, especially inefficient investment.The thesis has great significant both in theory and practice. Firstly, although there have been so many researches on enterprise value, those from the perspective of CFO’s financial executive force are actually not common. So it would diversify the points of view for enterprise value studies. Secondly, it also discloses inefficient investment’s effect upon enterprise value and also proves inhibiting effect of CFO’s financial executive force on inefficient investment. Besides, the thesis is significant in practice. On one hand, it provides a new perspective of promoting enterprise value via CFO’s financial executive force. It would provide operators a new way to think about how to upgrade enterprise value from CFO’s executive force. On the other hand, it shows how to manage corporations through the prevention of inefficient investment. Companies could improve CFO’s executive force so as to actively restrain inefficient investment, especially over investment.The thesis starts by referring to documents about three subjects:enterprise value, inefficient investment and CFO’s financial executive force. On that basis, it combines two methods of normative study and positive study. The latter is the main method. In the positive study, CFO’s executive force is the independent variable while enterprise value is the dependent variable. Besides, inefficient investment is regarded as an intervening variable, which derives from Richardson Model. According to standard of the intervening variable, the data is divided into two data arrays of inadequate investment and over-investment. Both are analyzed via positive study. With the help of the professor Wen Zhonglin’s Three Steps to Test Intermediate Variable, the thesis proves impact of CFO’s financial executive force on enterprise value. It also reveals how CFO’s financial executive force shows the impact on enterprise value through restraining inefficient investment. It proves the mediation effect of inefficient investment.The thesis have several innovations. First is about the evaluation of CFO’s financial executive force. From the perspective of board of directors, the thesis evaluates CFO’s financial executive force by the following standards:if CFO has been invited into BOD and has the right to make decisions. It is a typical method. The scholar Xiangrui has ever discussed about it in his paper published in the accounting research. Secondly, it discusses the relationship between CFO’s financial executive force and enterprise value, which is relatively new in domestic researches. Therefore, it offers a fresh point of view and enriches researches about enterprise value. Besides, it chooses inefficient investment as intervening variable and reveals how CFO shows the impact on enterprise value through inefficient investment.The thesis finally puts up some new meaningful conclusions. It shows that there is a positive correlation between CFO’s financial executive force and enterprise value. Enterprise value is actively increased through the restrain of inefficient investment, which acts as intervening variable. At the same time, it points out that such methods as inviting CFO into board of directors and improving their financial executive force, especially their role in decision-making, could control inefficient investment and over-investment. It plays an extremely important role in promoting enterprise value.