Paper short abstract:

This study sought to understand the determinants and effects of Chief Financial Officers (CFOs) in the Japanese corporate sector by conducting quantitative analysis with the data from the Japanese listed firms from 2004 to 2021.

Paper long abstract:

Chief financial officers (CFOs) are considered the financial stewards of their companies and arguably second in importance only to the Chief Executive Officer (CEO) in corporate hierarchies. Despite the importance of the CFO position, at least in U.S. firms, very little attention in academia has been paid to the role a CFO plays in corporate finance, especially in Japan. In fact, the appointment or the use of the title CFO is a relatively recent phenomena in Japan where 10% of the listed firms in Japan have their CFOs in 2021 compared 2.5% in 2004. Drawing on the theoretical lens of institutional logics, this paper seeks to empirically examine determinants and effects of the CFOs in Japanese listed firms. We use the financial data and annual reports of the listed firms from 2004 and 2021 for the panel data and difference in difference analyses. Our panel data analysis reveals two key determinants of the presence of CFOs, the disclosure of annual reports in English and the degree of institutional shareholding. Our difference in difference analysis finds no clear impact of the presence of CFOs on their corporate performance such as ROE. These results imply that CFOs play a role in communicating with domestic and overseas shareholders but the CFOs has little impact on their own firm performance.