CFOs in the shadows: Co-option and the shaping of China’s corporate cash holdings

Wenqiong Liu, Chih-Chuan Yeh, Ziqi Li and Ho-Chuan Huang

Finance Research Letters, 2024, vol. 67, issue PB

Abstract: This study investigates the relationship between CFO co-option and corporate cash holdings in China from 2000 to 2022, revealing that CFOs appointed after CEOs tend to maintain higher cash reserves, possibly due to compromised decision-making independence. The effect is more pronounced in firms with higher risks, fewer financial constraints, less market competition, and smaller size, and is largely mediated by the impact of co-opted CFOs on worsening accounting quality, highlighting the complex dynamics between executive roles and financial decision-making in corporate governance.

Keywords: Cash holdings; CEO; CFO; Co-option (search for similar items in EconPapers)
JEL-codes: C23 G30 G34 G39 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009802

DOI: 10.1016/j.frl.2024.105950

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