CEO foreign experience and corporate financial investment

Using a hand-collected sample of CEOs' foreign experience data for Chinese listed firms from 2008 to 2018, we investigate the impact of CEO foreign experience on corporate financial investment behaviors. We find a significantly negative association between CEO foreign experience and risky finan...

Full description

Saved in:
Bibliographic Details
Published inInternational review of economics & finance Vol. 93; pp. 929 - 946
Main Authors Liang, Shangkun, Niu, Yuhao, Xin, Fu, Jiang, Lixian
Format Journal Article
LanguageEnglish
Published Elsevier Inc 01.06.2024
Subjects
CEO
Corporate financial investment
Corporate governance
Foreign experience
Corporate financial investment
Corporate governance
F65
Foreign experience
G32
G14
CEO
Online AccessGet full text

Cover

More Information
Summary:Using a hand-collected sample of CEOs' foreign experience data for Chinese listed firms from 2008 to 2018, we investigate the impact of CEO foreign experience on corporate financial investment behaviors. We find a significantly negative association between CEO foreign experience and risky financial investment and a significantly positive association between CEO foreign experience and safety financial investment, suggesting CEOs with foreign experience can help constrain their firms' risky investment. The result is robust to Heckman two-stage analysis, instrumental variable approach, propensity score matching, and other robustness tests. Further analyses reveal that CEOs with foreign experience act as a key role of inhibiting the risky financial investment when firms have suffered poor internal or external corporate governance. Moreover, the relation between CEOs' foreign experience and financial investment is more pronounced when CEOs have financial background or CEO's tenure is shorter. The relation between CEOs' foreign experience and financial investment is more significant when CEO's overseas background belongs to a common law country or region. After replacing the dependent variable, this paper finds that CEO's overseas background also inhibits firm's share price risk and business risk. Finally, this conclusion is consistent with the CFO's overseas experience as the research object. Overall, the findings suggest that CEO foreign experience matters for corporate financial decisions in emerging markets.
ISSN:1059-0560
1873-8036
DOI:10.1016/j.iref.2024.03.080