We often warn investors to be wary of mutual funds with high turnover. Speedy turnover means the managers are rapidly jumping in and out of various investments -- rather than sticking with them -- and generating steep commission costs and tax hits along the way. We also urge investors themselves not to churn their own portfolios. If you don't have the patience to wait for the companies you believe in to perform -- well, then, you're really just speculating.
There's another kind of churning to pay at least some attention to: executive churning.
According to CFO Magazine, for example, a heck of a lot of CFOs are moving from one job to another this year. Turnover is up a full 50% over last year's levels: "This year through July, there have been 1,444 changes in the top finance slot, according to Richard Jacovitz, SVP Director of Research at Liberum Research. This compares with just 963 through the first seven months of last year. At the current pace, there will be nearly 2,500 CFO changes for the entire year. Last year, the total was 1,867." (The study also revealed that twice as many CFOs were hired from outside a company as there were promoted from within.)
Some firms experiencing CFO turnover recently include Accenture
It's also worth asking why the former CFO left. Are there accounting or other financial problems present, or perhaps in the offing? Did the former CFO find a greener pasture or leave to "spend more time with my family?" These are questions worth finding answers to, if you can -- because the CFO's job is a rather important one.
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