Top companies who keep it 'in the family' when hiring a CFO are more likely to be rewarded with greater loyalty and better returns than recruiting externally, according to the research carried out by The Curzon Partnership.

Studies by the executive recruitment specialists over the last five years found that FTSE 100 companies who appointed internally found the individual remained in the post for an average of six years, this compared favourably with external recruits whose average tenure is 30% lower at 4.6 years.

Not only did they provide more stability, but the research indicated that the return on assets for businesses who appointed their CFO from within their own ranks was around a third better at 9.5%, than the 7.1% experienced at companies who looked further afield.

James Colhoun a partner at Curzon believes the findings are not surprising, he said: 'Internally bred CFOs know the company, its markets and its culture far better than an outsider. The best CFOs will not only understand the right strategy to improve returns and properly exploit the businesses' assets but, crucially, they will know how best to deliver that strategy.

'Externally appointed CFOs, on joining, will have no discernible network and, therefore, less of a power base and less leverage with the board and other key executives within the company and are likely to find it harder to effect the changes they want to make or hold business units to their targets.'

Despite the benefits of hiring an internal CFO, the research has noticed a rising trend, since the credit crunch, of appointments being individuals from elsewhere. This Colhoun considers could reflect shareholder pressure and a desire to 'spring clean' of senior management after poor financial results.

He adds: 'It is an understandable reaction but evidence suggests that such hires do not always deliver the results that shareholders are looking for. Crisis situations may lead to purges and a break in management continuity and all the risks that brings with it.

'I am not saying that hiring the CFO from inside the company will magically lead to better financial performance and stronger returns, but evidence strongly suggests that investment in succession planning is time well spent.'