Research On Military CEO And Their Irrational Corporate Financial Decision-making Behavior

This thesis studies the corporate financing policies of the listed companies of Military CEOs in China, under the framework of Behavioral Corporate Finance Theory and tries to figure out if the military service of CEOs has significant influence on their corporate investing and financing decision-making behavior in latter part of life.Firstly, based on theory research and mechanism analysis, we find that Military CEO are tend to be high risk-taking, overconfident and aggressive, resulted by the Soldiers Core Value, combat and training experiences. Then, using case studies and statistical analysis, we come to the result that companies led by Military CEOs generally exhibit aggressive M&A activities and higher leverage.Further, based on the collected samples of A-share listed companies led by Military CEOs from2002to2010, we use multiple linear regression method to examine the effect of a CEO’s military service on corporate merger and acquisition decisions and leverage. We find that companies led by CEOs with military service experience conduct acquisitions more frequently. Further analyses suggest that companies led by CEOs with military backgrounds have higher leverage.Finally, refer to the above evidences, we come to the conclusion that Military CEOs tend to conduct M&A more frequently, which is funded by loans, mainly.