CEOs' financial work experience and corporate supplier stability: Evidence from China

This paper examines the impact of CEOs' financial work experience on corporate supplier stability. We find that a firm's supplier stability decreases when it's CEO has financial work experience. The impact is more pronounced for firms with fewer local procurement and less analyst coverage, and firms with lower industry concentration and limited market power. We also find that the impact of financial work experience is weakened when the financial expert CEO is female or older. The investigation into influencing channels shows that CEOs' financial work experience decreases corporate supplier stability through an increase in corporate financial investments, a decrease in financial slack, and an increase in agency costs. Finally, we find that decreased supplier stability driven by CEOs' financial work experience increases corporate operating risk. Our findings highlight the costs of hiring financial expert CEOs from the perspective of supply chain.