CEO career concerns and investment efficiency: Evidence from China |
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| Institution: | 1. Department of Finance, National Taiwan University, Taiwan;2. School of Economics and Management, Southwest Jiaotong University, China;3. School of Management, Gui Lin University of Technology, China;1. Financial Stability Division, Central Bank of Ireland, Ireland;2. Economic and Social Research Institute, Dublin, Ireland;3. National Center for Socio Economic Information and Forecasting, Ministry of Planning and Investment, Viet Nam;4. Department of Economics, Trinity College Dublin, Ireland;1. School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing, China;2. School of Economics, Shandong University, Jinan, China |
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| Abstract: | This paper investigates the impact of CEO career concerns on a firm's investment efficiency for publicly listed Chinese companies from 2002 to 2009. We use CEO age and appointment of new CEO as proxies for CEO career concerns. For the whole sample, we demonstrate that younger CEOs and newly appointed CEOs are prone to invest less and more efficiently. We divide our sample into state-owned enterprises and non-state-owned enterprises, depending on their ultimate ownership. The age effect seems stronger in state-owned enterprises and the new appointment effect seems stronger in non-state-owned enterprises. Our results indicate that CEOs have long-term career concerns that can improve a firm's investment efficiency even in a transitional economy such as China. |
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