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CEO Background, Investment And Corporate Performance

Posted on:2016-10-31Degree:MasterType:Thesis
Country:ChinaCandidate:T LiFull Text:PDF
GTID:2309330467475095Subject:Finance
Abstract/Summary:PDF Full Text Request
Investment is important for the enterprises and it has has important influence to the enterprise development. It is the foundation of enterprises profit. Investment not only decides the payoff of enterprises’financial cost,affect corporate’s value creating, but also affects the macro economic operation and development of capital market. Many researches focus on the factors influence corporate investment, including country level governance, firm level governance,financial situation and manager background.As the key of the corporate management team,the CEO controls the investment strategy.When making investment decisions,the CEO will use his cognition as the rule. Because lack of complete information and ration, the ceo has to rely on his incentive and experience,so the background and experience which affect CEO’s cognition will also affect the CEO’s decision making process. So, it is of great importance to study the effect of CEO background on their investment decisions.In this study, according to upper echelon theory, I use CEO age education level, gender, duel or not, tenure, political connection,major as independent variables and capital expenditure investment as dependent variable. The sample is A-share companies from2005to2012. I construct multiple regression model and also distinguish property and industry,to study how CEO background affect investment expenditure, further more affect corporate market performance and whether corporate governance will reduce CEO’s influence to investment expenditure. I get3conclusions from the study:(1)CEO education level,duel,gender will affect investment expenditure.(2) After distinguishing the property, the results is different,. In the non-state-owned companies, CEO education level, duel will affect investment expenditure. While in the state-owned companies, CEO duel,tenure, political connection,gender will all affect investment expenditure.(3) After distinguishing the industry, in the non-manufacturing companies, the outcome is as the same as it in the state-owned companies. But in the manufacture industry,only duel,business management major are significant.Factors such as duel, tenure and gender also impact market performance by ways of investment scale.Here are the innovation ideas of this paper. First,this paper adds personal experience such as tenure, political connection and duel as the independent variables compared with the former studies, which only consider the demographic statistic variables such as age,gender,education and majors etc. Second, this paper analyzes how CEO background influence corporate expenditure while most former studies only focus on how the CEO behaviors influence the acquisition. Additionally, this paper also checks the market effect of CEO’s investing behavior.The meaning of this paper is significant. Firstly,it break the rational hypothesis,empirically test how CEO background affect corporate investment and provide evidence about CEO background will influence corporate investment. Secondly,by distinguish property and industry, the outcome of this paper is more meaningful. Thirdly, the outcome of this paper provide guidance for the election of CEO.
Keywords/Search Tags:CEO background, investment expenditure, market performance, upper echelon theory
PDF Full Text Request
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