Companies should encourage their CFOs to serve on boards of directors of other companies, not restrict them from participating, according to new research.
A new study (PDF), conducted by an associate professor of accounting at the University of Louisiana at Lafayette, drew data from 3,741 firms during a 12-month period. The study found higher quality of financial reporting among firms whose CFOs served as outside directors.
Because directorships are valuable resources for learning and networking, CFOs who serve on outside boards can help reduce financial misstatements of their home firms, the study concluded. Learn more here.