Executive Military Experience And Investment Efficiency

There is mounting evidence of the influence of personal characteristics of chief executive officers(CEOs)on corporate outcomes.In the contemporary era of China,it is valuable and meaningful to study the relation between military service of executives and corporate investment.As one special group of Chinese enterprisers,military executives have some common characters and abilities,such as leadership,responsibility and risk aversion.It is necessary to discuss whether and how these personalities of military executives have influence on investment efficiency.Based on Upper Echelons,this paper analyses the relation between military service of executives and investment decisions and investment efficiency.Using the panel data of Chinese listed companies from 2011 to 2016,this study concludes that firms with military executives 1)promote underinvestment in high growth industries;2)restrain over investment in low growth industries.All the conclusions above have been tested and verified with DID(Difference-in-difference),PSM(Propensity Score Matching)and industry growth shocks to make sure the robustness.Moreover,this paper discusses whether and how firm value varies with investment efficiency influenced by military executives.It is concluded that corporate value can decrease in high growth industries due to military executives promote underinvestment,while it can increase in low growth industries due to military executives restrain overinvestment.Taken together,the results of this paper show that military service has significant explanatory power for investment efficiency and corporate value.