VideoAndrew Fastow, the disgraced CFO of Enron, possessed a masters in business administration degree. It was a prestigious one, to boot, from Kellogg Business School at Northwestern University in the US. He never became an accountant. Sherron Watkins, the woman who blew the whistle on the Enron scandal and a certified public accountant, never earned an MBA. Ergo, Fastow was more easily corrupted than Watkins.
Avid readers of Scott Turow, the US bard of corporate malfeasance, might see this as a feasible proposition, but hang on a minute. If there were no crooked accountants, then Arthur Andersen, Enron's once tarnished, now-vanished auditor, would still be sending armies of green eyeshades to pore over company P&Ls. And not every finance exec armed with an MBA drove a dagger into their company. The swing-back toward accounting and away from MBAs could be a long-term trend — or conventional wisdom that stands to change yet again.
For aspiring financial executives and current CFOs looking to pull themselves onto the next rung, hard choices have to made about how to top off their education. The question of whether to spring for that MBA necessarily presents a risk/reward scenario. Earning an MBA means spending precious time and money to win those three letters that once carried such a cachet, and may yet again. But the opportunity cost could be heavy in the current environment of Asian growth. The consequence of taking time away from a growing job may mean a missed chance for advancement. So is an MBA necessary, or not?
The Pendulum Effect
Like so many trends affecting their jobs, CFOs in Asia must grapple with residual effects from upsets in the far-off US market. Financial execs armed with MBAs only and trained as investment bankers became the rage at many large US companies in the 1990s, while accounting and controller functions were delegated to CPA subordinates. The gloss came off this approach after Enron's fall, and the economic downturn put it distinctly out of fashion. The US Sarbanes-Oxley Act added pressures — and accountability — to companies' senior executives, specifically the finance team. The M&A market went fallow. Now, with growth returning worldwide, the pendulum is easing back to the middle. Companies are calling for skills that include a mix of accounting, finance, and strategy.
Reflecting the state of flux, the region's CFOs stand divided in opinion. Some are full-fledged supporters of wonky B-school degrees. "The best CFOs are well rounded," says Mark Keithley, CFO at IP/Internet network solutions provider NetStar in Hong Kong. "They're not just CPA-accountants. They're not just treasurer-MBA-bankers. You'd like to have it all." Keithley, who is a CPA, a certified internal auditor, and holds an MBA, adds: "A bookkeeper or accountant is a controller, able to close the books and meet deadlines and targets, but he does not necessarily understand what the numbers mean. You don't want just a numbers cruncher."
Others argue that an accountancy degree is enough qualification, if the finance professional adds to his experience with varied responsibilities in operations. "I got into banking, treasury, and financial transactions when I was doing my chartered accountancy training in London," says Ravi Ramu, CFO at Mphasis, the Bangalore IT company. Ramu studied accounting in the UK and is a member of the Institute of Chartered Accountants in England and Wales. "I used to audit banks. You get to understand what happened in the transaction, things like risk management. I also learned what needed to go into the books." Ramu speculates that one reason MBAs became CFO material in the US is because CPAs there are not required to undergo articleship before sitting for board exams — a requirement under the UK system.
Kris Chellam, CFO of California semiconductor company Xilinx, plumps for hard-earned experience, and choosing the right proving ground for it. "One learns more from experience and peers than any MBA program," he says. The Malaysian-born chartered accountant was controller at Intel and CFO at Atmel before becoming senior vice-president for finance of Xilinx in 1998. The key is to sign up with high-profile companies with a reputation for good management and probity. "Intel provided me a great foundation for both skills development and management training," says Chellam. "Most of all, the finance role required utmost integrity and professionalism. Any breach would have led to termination."
And some academics caution that the merits of ethics training under a CPA degree are overrated. "There is no doubt that there is a code of ethics that public accountants abide by," says David Wilson, president and CEO of Washington-based Graduate Management Admission Council, the body that administers the GMAT test that is a requirement for admission in more than 1,700 business schools around the world. He adds: "But taking a course in ethics doesn't make you ethical, anymore than staying in the garage makes you an automobile."
Balancing Act
Rakesh Nagpal doesn't doubt his own integrity — and he still wants that MBA. It was two weeks before his 40th birthday when he spoke to CFO Asia. Naturally, the Singapore-based finance director of Avnet, an electronics firm, was thinking about the next step in his career. "Every CFO has to catch up with the changes in his industry," he says. For Nagpal, who qualified as a chartered accountant in his native India, that means going back to school for an MBA degree. "It's a logical step," he says, "in positioning yourself to become a CEO."
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