Investment efficiency under financial constraints: The role of CEO power

IF 6.9 2区经济学 Q1 BUSINESS, FINANCE

Research in International Business and Finance Pub Date : 2025-07-01 DOI:10.1016/j.ribaf.2025.103059

Muhammad Ansar Majeed , Irfan Ullah , Tanveer Ahsan , Bakr Al-Gamrh

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Abstract

Financial limitations can influence how effectively corporations invest, with influential CEOs playing a key role in making investment choices. This study investigates the link between CEO power and investment effectiveness in the context of financial limitations, using a dataset of Chinese firms listed from 2005 to 2022. We observe a negative association between CEO power and investment efficiency. Nonetheless, powerful CEOs facing financial pressures can notably enhance investment efficiency through adept strategic choices. Our findings remain robust across a range of alternative measures of investment efficiency and financial constraints, as well as various econometric specifications. Further examination shows that the investment inefficiencies associated with powerful CEOs mainly arise from overinvestment, while external governance factors, such as analyst coverage and media attention, as well as CEO gender, significantly impact the relationship between CEO power and investment efficiency. This research contributes to the existing body of knowledge on CEO power by integrating agency theory and strategic choice frameworks to clarify the relationship between CEO power and investment efficiency in financially constrained situations.

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财务约束下的投资效率：CEO权力的作用

财务限制会影响企业的投资效率，而有影响力的首席执行官在做出投资选择方面发挥着关键作用。本文利用2005年至2022年中国上市公司的数据集，研究了财务限制背景下CEO权力与投资有效性之间的关系。我们观察到CEO权力与投资效率之间存在负相关关系。然而，面对财务压力的强势ceo可以通过巧妙的战略选择显著提高投资效率。我们的研究结果在一系列投资效率和金融约束的替代措施以及各种计量经济学规范中都保持强劲。进一步的研究表明，与强势CEO相关的投资效率低下主要来自于过度投资，而外部治理因素，如分析师的报道和媒体的关注，以及CEO的性别，显著影响着CEO权力与投资效率之间的关系。本研究通过整合代理理论和战略选择框架，对现有的CEO权力知识体系做出贡献，以澄清财务约束情况下CEO权力与投资效率之间的关系。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Research in International Business and Finance BUSINESS, FINANCE-

CiteScore

11.20

自引率

9.20%

发文量

240

期刊介绍： Research in International Business and Finance (RIBAF) seeks to consolidate its position as a premier scholarly vehicle of academic finance. The Journal publishes high quality, insightful, well-written papers that explore current and new issues in international finance. Papers that foster dialogue, innovation, and intellectual risk-taking in financial studies; as well as shed light on the interaction between finance and broader societal concerns are particularly appreciated. The Journal welcomes submissions that seek to expand the boundaries of academic finance and otherwise challenge the discipline. Papers studying finance using a variety of methodologies; as well as interdisciplinary studies will be considered for publication. Papers that examine topical issues using extensive international data sets are welcome. Single-country studies can also be considered for publication provided that they develop novel methodological and theoretical approaches or fall within the Journal''s priority themes. It is especially important that single-country studies communicate to the reader why the particular chosen country is especially relevant to the issue being investigated. [...] The scope of topics that are most interesting to RIBAF readers include the following: -Financial markets and institutions -Financial practices and sustainability -The impact of national culture on finance -The impact of formal and informal institutions on finance -Privatizations, public financing, and nonprofit issues in finance -Interdisciplinary financial studies -Finance and international development -International financial crises and regulation -Financialization studies -International financial integration and architecture -Behavioral aspects in finance -Consumer finance -Methodologies and conceptualization issues related to finance