How do various Chartered Accounting Qualifications Prepare Students for Strategic Leadership?
Valentine Dobgima Nti, CGMA, CGMA, PMP, M.Sc., MBA
In this piece, I performed a comparative analysis of five Chartered Accounting Designations (2 from the USA: CPA, CMA; 2 from the UK: CIMA and ACCA; and 1 from South Africa: CA (SA)). Using CEO-succession and firm performance as a proxy for career success and an indication of Strategic Leadership Development embedded in the underlying education and training for each designation, I examine the performance of firms who are led by CEOs who hold various chartered accounting designations versus and those led by CEOs who do not hold such designations!
The main purpose was to statistically explain the link between a Chartered Accounting Designation, Chief Financial Officer to Chief Executive Officer (CFO-to-CEO) successions and Firm performance in three Anglo-Saxon Countries (USA, UK and South Africa). Employing a Comparative Research Design, I translated the focus of Strategic Leadership and the Upper-Echelon Theory on two Top Management Team actors, the CFO and COO, as potential contenders for CEO-succession.
I then searched for similarity and variance within and between the three countries, by comparing the backgrounds of the Top-32-Listed Firm CEOs versus those of the Top-32-Listed Financial Services CEOs in each country [N = 192 CEOs]. I found significant differences in the distribution of CFO-to-CEO successions within but not between countries. Amongst the Top-32-Listed Firms, Chief Operating Officers (COOs) are a threat to CFO-to-CEO aspirations in the USA, but this is not the case in the UK and South Africa. Within each country, CEOs with a CFO background are strongly attracted to-and-by Financial Services Organisations; but that attraction did not provide any significant overall competitive advantage to the CFOs over the COOs, in their mutual quest for CEO-succession. On share price performance over the last 10 years [2010 – 2020, i.e., N = 960 Firm years], I found that Financial Services CEOs who have a CFO background Do Not Outperform their Counterparts who do not have such a background. This imposes a contrarian challenge as to the professed links between CEO’s background characteristics and Firm performance.
I then conducted a content analysis and Bloom Taxonomy Rankings of the Five Chartered Accounting Designations and I found that on Strategic Leadership Development, the Chartered Accounting Qualifications that are primarily focused on developing Professional Accountants In Business (PAIB) (CMA, CIMA) outranked those that focus on developing Professional Accountants In Public Practice (PAIPP) (CPA, ACCA, CA (SA)). However, a Multinomial Regression Model detected a major disconnect: Paradoxically, the Chartered Accounting Designations that focus on Public Practice (CPA, ACCA, CA (SA) are strongly correlated with CFO-to-CEO successions, whilst those that focus on Business (CMA, CIMA) are not.
I conclude that this disconnect, together with competition from COOs, offers a statistical explanation for the disjoint between the Chartered Accounting Qualification, CFO-to-CEO successions and Firm performance. I then warn that a post-COVID-19 new world order will only accelerate technological disruptions, opening more threats than opportunities, unless the global professional accounting education fraternity embarks on deeper reforms, especially on Strategic Leadership Development.
Read the background in my separate blog, titled: CEO-Succession: CFO or COO?