Lessons From the Crisis for Corporate Finance
CFOs must get prepared, says IESE’s José M. Campa
As a result of the crisis, many companies have seen their ability to carry out strategic plans greatly reduced due to financial pressures. A new article in the IESE Insight management magazine analyzes how the finance function went off track and overstepped its legitimate bounds, leaving many companies exposed and vulnerable.
"Back to Reality: Lessons From the Crisis for Corporate Finance" examines the three main functions of finance – auditing and control, treasury and fund-raising, and strategic planning and forecasting – and considers the major shortcomings detected in the management of each, in light of the crisis.
The author, José M. Campa, is a professor of Financial Management and International Economics at IESE, who draws upon his considerable expertise in international finance and macroeconomics, gleaned through teaching (Harvard, Columbia, N.Y.U. Stern), as a consultant (World Bank, International Monetary Fund, Federal Reserve Bank of New York, European Commission) and as Secretary of State for Economic Affairs of the Spanish government (2009-2011).
He predicts that "corporate finance will likely get more complicated as more and more stakeholders, internally and externally, begin to question what finance managers do."
"CFOs must be prepared to explain themselves more often and in much clearer terms to more vested parties. Stakeholders are looking for assurances that lessons have indeed been learned and that past activities will not repeat themselves, bringing any more unpleasant surprises."
He stresses the essential attitudes and principles that finance sector professionals must adopt – including clarity, vision, caution, care and prudence – as well as the appropriate actions to go along with them.
In the end, he urges corporate finance to get back to where it always belonged: supporting the company’s core business activities through financing and sound financial advice.