With Kon Kenta (近健太), who comes from a CFO background, set to become Toyota Motor Corporation's new president, more executives from finance backgrounds, rather than those who rose through operational ranks, are taking the top job. This reflects a backdrop in which companies are expected to apply financial expertise to capital allocation and investor relations.
Kon Kenta (近健太), who comes from a CFO background, is set to become Toyota Motor Corporation's new president and CEO on 1 April. Against the traditional image of corporate leaders rising through operational ranks, the move to appoint finance executives to the top job is attracting attention.
As executives responsible for overseeing financial strategy, including financing and investment decisions, CFOs also often serve as the point of contact for investor relations. The title CFO is said to have become widespread in Japan around 1995, and the role of CFOs as heads of the finance function has been strengthened.
The number of references to CFOs in disclosures on "Changes in Representative Directors" and "Executive Appointments" by listed companies has been increasing since around 2020. The author estimates that at least 5 CFOs have been promoted to CEO each year since 2021. Overseas, approximately 10% of CEOs at S&P 1500 companies in the United States and approximately 20% of CEOs worldwide are said to have CFO experience.
The reasons cited for appointing finance-focused executives to the top job include the growing importance of dialogue with investors and the impact of the cost of capital in a rising-interest-rate environment. As investor relations becomes more important, financial expertise is considered advantageous for earning the confidence of the capital markets, while rising interest rates have been identified as a factor that makes investment decisions more difficult.