Chief Finance Officer Expertise in The Digital Age: Leveraging Derivatives for Strategic Financial Growth

Abstract

The role of the Chief Finance Officer (CFO) has undergone a profound transformation, evolving from a traditional, backward-looking function focused on control and compliance to a forward-thinking, strategic role integral to value creation and long-term organizational impact. In an increasingly volatile and interconnected global economy, this evolution necessitates a new approach to financial instruments. This paper examines how modern CFOs, equipped with a strategic mindset and digital acumen, can leverage financial derivatives to drive corporate resilience and growth, particularly within the context of emerging markets. This study investigates the strategic role of Chief Finance Officer (CFO) financial expertise in the deployment of financial derivatives for corporate growth among listed firms in Kenya. Anchored in Upper Echelons Theory and guided by a longitudinal panel design, the research analyzes 195 firm-year observations from the Nairobi Securities Exchange between 2019 and 2023. Using hierarchical multiple regression and controlling for firm age and size, the findings reveal that CFO financial expertise has a positive and statistically significant effect on the use of financial derivatives (β = 0.065, ρ < 0.05). The study contextualizes this within Kenya’s evolving derivatives market, highlighting the strategic imperative for digitally-enabled CFOs to leverage instruments such as swaps, futures, and options not merely for hedging but for value creation. It further explores the intersection of digital acumen, regulatory complexity, and executive leadership in shaping derivative strategy. The paper contributes to the discourse on financial leadership by extending UET to include digital fluency and offers a roadmap for CFOs in emerging markets to transform financial risk into strategic advantage.