CFOs who double up as COOs: Now is your time to brag about the improvements you bring to your organizations and ask for better packages.
The hybrid CFO-COO role improves the quality of a company’s financial reporting, according to a Wall Street Journal report quoting a study of more than 3,500 organizations over a 16-year period.
About 12% of the companies studied had a combined CFO-COO role between 2000 and 2016 for at least one year while the executive in the dual role had a CFO background in 97% of the cases, the report says.
The study, done by the University of Alabama and the University of Oklahoma and published in the Journal of Management Accounting Research found that CFO-COOs enhance financial reporting in several ways.
According to the study, discretionary accruals—non-cash accounting items that involve some estimation—are more predictive of future cash flows at a firm with one person taking up the two roles than one with separate executives.
More accurate estimates result in few corrections to the books when the cash comes in while financial reports become more reliable.
The study also says that there’s no evidence that the dual role adversely affects operations of companies.
Though the dual role usually is found in smaller and high growth firms, it also exists in larger ones such as PepsiCo and Occidental Petroleum.