As the COVID-19 pandemic continues to challenge companies worldwide, the role of Chief Financial Officers (CFOs) has never been more critical.
Dr Syed Shams, a Senior Lecturer in Accounting and Finance at the University of Southern Queensland, has been awarded an Accounting and Finance Association of Australia and New Zealand (AFAANZ) grant to examine the role and need for CFO's financial expertise in handling the unprecedented event.
The grant was part of AFAANZ's Research Scheme, which supports research projects that address or respond to contemporary and future challenges to accounting and finance practice, policy and/or the professions.
Dr Shams said many companies around the world faced increased liquidity pressure and financial distress as a result of the COVID-19 lockdowns.
"A huge number of publicly-listed companies in various industries were affected by declining share prices, revenues and profit," he said.
"These enormous losses placed firms in a difficult situation and many companies are still struggling to overcome the unprecedented financial turmoil."
Dr Shams said his research project aimed to provide a clearer understanding of how valuable CFOs are on company executive teams in managing financial decisions during negative external shocks such as COVID-19.
"My belief is firms with CFO's higher financial expertise were more diligent in dealing with financial constraints during the global pandemic, but my aim is to find out what extent their expertise helped mitigate the severity of financial constraints," he said.
"I will be examining several metrics of CFOs, including educational qualifications, number of qualifications and experience, to see whether they are linked to how well their companies managed the risk from COVID-19 and improved their financial position."
In addition, Dr Shams will be investigating whether the relationship between the financial expertise of a CFO and financial constraints faced by a firm is moderated by the higher sustainability performance.
"A recent report by Deloitte shows that CFOs play an important role in reshaping the sustainability performance of firms," he said.
"I want to further examine whether CFOs who emphasise their focus beyond maximising short-term shareholder profit by considering the benefits of all stakeholders can tackle the financial losses better compared to their counterparts."
Dr Shams' investigation will be carried out in collaboration with Dr Sudipta Bose, a Senior Lecturer at the University of Newcastle.
