The dark side effects of CEO general managerial skills on corporate overinvestment

Man Chen (), Si Liu (), Feng Wang () and Rui Guo ()
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Man Chen: China University of Geosciences
Si Liu: Hunan Normal University
Feng Wang: Hunan University
Rui Guo: China University of Geosciences

Asia Pacific Journal of Management, 2024, vol. 41, issue 4, No 18, 2277-2300

Abstract: Abstract Effective investment is recognized as a powerful determinant of firms’ growth and long-term advantages. However, despite long and extensive research on the upper echelons, the role of top managers’ work experiences in corporate investments remains unclear. With an investigation of the effect of CEO general managerial skills gained through lifetime work experiences on corporate overinvestment, the current study also tests boundary conditions at which this effect may be magnified or attenuated. An empirical analysis of Chinese publicly listed firms reveals that CEO general managerial skills increase corporate overinvestment: Generalist CEOs (versus specialist CEOs) are more likely to promote overinvestment. Moreover, whereas board size and economic policy uncertainty attenuate the relationship between CEO general managerial skills and corporate overinvestment, firm profitability magnifies the relationship. By examining the dark side of this managerial characteristic of CEO, this study provides important implications for literature about corporate investment and upper echelons.

Keywords: CEO general managerial skills; Generalist CEO; Corporate overinvestment (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10490-023-09910-8

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