The Impact of CFO Characteristics on Z-score of Financial Crisis Warning -- A Case Study of Manufacturing Industry of Listed Companies in China

Abstract

Based on the issue of the influence of the CFO on the overall financial physique of the company, their characteristics are directly related to their decision-making methods and implementation results. This study takes the manufacturing industry of Chinese listed companies from 2018 to 2020 as a sample and uses the fs/QCA method to explore the relationship between the CFO's characteristics and the company's financial Z score. The empirical results show that the two necessary conditions for a good overall financial structure are the CFO holds a high shareholding of the company and the company is a state-owned enterprise; furthermore, there are four situations will enhance the effect. The first one is that the company pays attention to specialty and innovation and is willing to invest in attracting talents, which helps to improve the overall financial physique of the enterprise; the second one is that the company with a stable operation and large scale should hire a CFO who is male and stable in his position, which can improve the overall financial constitution of the enterprise; the third situation is that the large-scale and old companies in the transition period should employ a young and professional financial executive with high salaries to help the company operate with his new ideas and new information, which can significantly improve the overall financial physique of the enterprise; and the last one situation is that if a small-scale emerging company employs a highly educated CFO, the more professional it can provide the company with rich professional advice, or the newly introduced young talents from outside serve as the CFO to help the company operate by relying on its innovative ideas and information, which can improve the overall financial physique of the enterprise.