Does CEO competence affect enterprises’ financial performance?

Xiaoying Wang, Yi Li, Chaoqian Fu and Zhenbang Yue

International Review of Economics & Finance, 2025, vol. 99, issue C

Abstract: Financial performance is the key to measuring the sustainability of an enterprise, and CEO competence plays a pivotal role in influencing this performance. This study, based on panel data from listed companies in China’s A-share market, employs a two-way fixed effects model to empirically examine the impact of CEO competence on enterprise financial performance and its underlying mechanisms. The results indicate that: CEO enterprising competence has a significant impact on enterprise financial performance, while CEO honing competence does not significantly influence financial performance. Secondly, internal control behavior serves as an effective channel through which CEO competence influences enterprise financial performance. Furthermore, newly appointed CEOs are better equipped to leverage market-oriented enterprising competence to enhance enterprise financial performance compared to long-serving CEOs. This study extends the Ansoff Matrix to develop a multidimensional framework for analyzing CEO competence, thereby enriching the research on the relationship between CEO competence and enterprise performance. It provides a new perspective for CEO selection and development and contributes marginally to the promotion of sound enterprise operations.

Keywords: CEO; Financial performance; Ansoff matrix; Internal control behavior (search for similar items in EconPapers)
JEL-codes: M12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025001649

DOI: 10.1016/j.iref.2025.104001

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