Military Experience Of Executive,Corporate Investment Behavior And Operatig Performance:A Preliminary Empirical Research

This study,using the data of observations from China’s A-share firms listed on the Shanghai and Shenzhen stock exchanges between 2007 and 2015,investigates how the military experience of top executives influences their corporate investment behavior and further affects operating performance.The results are below: First,as for the corporate investment behavior,when the companies have free cash flow,firms run by military top executives significantly have less over-investment than those led by non-military top executives;when the companies are short of free cash flow,firms run by military top executives significantly have less under-investment than those led by non-military top executives.Second,about the impact on the company’s operating performance,military top executives can enhance the operating performance by reducing the degree of over-investment and can improve the operating performance by inhibiting the under-investment;Third,those military top executives who were combat soldiers are self-disciplined and pay more attention to control the corporate risk,so they can reduce the over-investment behavior when the company have enough free cash flow and improve operating performance.When the companies lack free cash,those military top executives who served for troops’ technical and service support can carry forward their perseverance and indomitable character,then lead the company to keep on investing and improve operating performance.This study firstly studies the logical chain of “military experience of top executives – company investment behavior – corporate performance",which enriches the research on the influence of management characteristics on corporate investment behavior.The results suggest that when the company’s free cash flow is sufficient,it can promote military executives especially who were combat soldiers in order to reduce the damage of company’s over-investment to the operating performance;the companies with free cash flow short can employ military executives especially who served for troops’ technical and service support in order to curb the company’s under-investment.Therefore,the results of this study mainly provides some reference for human resources management about selecting top executives and help the company to improve investment efficiency and business performance.