An Empirical Study On The Influence Of CFO Power On Investment Efficiency

CFO is called Chief Financial Officer,which is the English abbreviation of Chief Financial Officer.With the improvement of modern corporate governance structure,CFO’s status has become increasingly prominent,and it is an important senior executive in an enterprise.Nowadays,the global economy is gradually becoming more and more integrated.Modern companies not only have to deal with the ever-changing business environment,but also need to make correct decisions under the volatile market environment.As the financial resource manager of the enterprise,the CFO plays an important role in the investment and financing decisions of the enterprise.Takes an important responsibility to avoid inefficient investment behavior in the company and to help the board monitor the CEO.As my country’s corporate governance mechanism has yet to be improved,companies generally have inefficient investment,information asymmetry,agency problems,etc.,make it easy for companies to miss high-quality investment opportunities,or managers to over-invest in pursuit of their own benefits.The CFO occupies a dominant position in financial management and holds the right to speak of financial resources.Different from the past,the role of the CFO has undergone a major change under modern corporate governance.It can participate in the formulation of corporate strategic decisions,and use its unique financial power to help shareholders supervise the CEO.Improve business investment efficiency.This paper takes the CFO as the research object,and based on the high-level echelon theory,it conducts a special study on the CFO’s power and its impact on the investment efficiency of enterprises.It integrates multiple personal characteristics of the CFO to construct a comprehensive index of CFO power,and examines the effect of the CFO’s power on corporate investment.Improve the CFO system to provide the corresponding basis.At the same time,under the support of information asymmetry theory and principal-agent theory,considering that the internal decision-making environment faced by enterprises is not the same,CFO will inevitably be influenced by the chairman and CEO when making investment decisions.The allocation of decisionmaking power of Changhe and CEO is included in the research framework.In addition,based on the property rights of Chinese enterprises,the influence of CFO power on investment efficiency under different property rights is investigated.This paper believes that CFO,as a financial resource manager,has important financial information within the enterprise,so when making financial decisions with the power of its own chief financial officer,it will bring important influence to the enterprise,and even affect the final decision-making result.Therefore,the research found the following conclusions:(1)CFO power enhancement can improve the efficiency of corporate investment;(2)Compared with companies with low separation of decision-making power allocation,that is,the chairman and CEO are held by the same person,and the separation of decision-making is high.Among the enterprises in2008,CFO power has a more significant impact on investment efficiency,and can improve corporate investment efficiency.CFO power has obvious advantages;(3)CFO power can exert obvious advantages in non-state-owned enterprises and significantly improve enterprise investment efficiency.In state-owned enterprises,it is found that the investment efficiency will increase with the increase of the CFO’s power in the early stage,but when the CFO’s power increases to a certain extent,the investment efficiency shows a weak downward trend.Based on the above conclusions,this paper suggests that,first of all,the CFO should actively help enterprises to plan and make decisions on investment and financing matters,and give full play to the power advantage of the chief financial officer.Secondly,enterprises should pay attention to the power status of the CFO,support the CFO to participate in the decision-making level of the company,appropriately increase the power advantage of the CFO,and establish a power check and balance mechanism.Finally,enterprises should consider multiple factors when appointing the chief financial officer,and pay attention to the background and professional competence of the chief financial officer.CFOs should start to build unique core competitiveness,improve professional ability,and ensure their professional competence.