Financial experts on the top management team : Do they reduce investment inefficiency?

Li, Zhe and Pryshchepa, Oksana and Wang, Bo (2023) Financial experts on the top management team : Do they reduce investment inefficiency? Journal of Business Finance and Accounting, 50 (1-2). pp. 198-235. ISSN 0306-686X

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Abstract

We examine the effect of the top management team (TMT) professional finance experience on firm investment efficiency. Top managers with a career background in finance help reduce deviations of investment from the level warranted by firm fundamentals. Reductions in investment inefficiencies are achieved by financial expert managers using project-specific rather than company-wide, discount rates for project evaluation and facilitating debt and equity issuance at lower costs. Greater investment efficiency due to the financial expertise of TMT improves firm performance. We demonstrate that these improvements are driven by the collective expertise of the TMT rather than solely by chief executive officers.

Item Type:
Journal Article
Journal or Publication Title:
Journal of Business Finance and Accounting
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2003
Subjects:
?? demographic characteristicexperiencefinancial expertfirm performanceinvestment efficiencytop management teamfinancebusiness, management and accounting (miscellaneous)accounting ??
ID Code:
187092
Deposited By:
Deposited On:
20 Feb 2023 11:25
Refereed?:
Yes
Published?:
Published
Last Modified:
15 Jul 2024 23:35