CEO experience, managerial overconfidence and investment efficiency: Evidence from a natural experiment in China

Ying Hao, Junyi Li, Xuegang Cui and Juan Ni

Pacific-Basin Finance Journal, 2023, vol. 80, issue C

Abstract: We examine how the early lives and career experiences of CEOs impact corporate investment efficiency in the Chinese economy. We identify two extraordinary events that are likely to underlie CEOs' formative experiences: the economic reforms that commenced in 1978 and CEOs' prior career experiences. We show that CEOs who experienced the economic reforms and opening-up in their early adult lives tend to be more confident and overinvest more than those who grew up during the planned economy era. Furthermore, CEOs whose entire careers have been in the business sector exhibit greater levels of confidence and overinvestment than those with long-term public administration experience prior to their service as corporate executives.

Keywords: Career experience; Early-life experiences; Investment efficiency; Managerial overconfidence; Reform and opening up policy (search for similar items in EconPapers)
JEL-codes: G30 G34 J16 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:80:y:2023:i:c:s0927538x2300149x

DOI: 10.1016/j.pacfin.2023.102083

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