The Impact Of CEO Career Concerns On The Corporate OFDI

Outward foreign direct investment(OFDI)is a micro-foundation of high-quality foreign opening,bringing new development opportunities for firms.But the complexity of multiple decisions of OFDI makes corporate governance challenging.Upper echelons theory suggests that CEO career concerns can influence corporate OFDI.Career concerns not only enhance long-term incentives for managers from career horizons but also induce short-sighted agency problems.The short-sightedness is detrimental to improving the quality of coporate investment.Therefore,it is of great theoretical and practical importance to identify and manage the agency problems that CEO career concerns pose to corporate OFDI.This dissertation explores agency problems in corporate OFDI of Chinese firms from CEO career concerns and examines the governance efficiency of the internal governance structure and external governance environment.First,the dissertation introduces the practical and theoretical background,explains the significance,the research content and the technical line,and identifies the theoretical basis of the dissertation through review,literature combing and model derivation.Second,in terms of empirical examination,the two-step model based on Probit-Poisson incorporates the probability of whether or not a firm engages in OFDI into the analysis of the impact of the extent and breadth of corporate OFDI,providing a realistic picture of the two-step effect of the extent and breadth of OFDI decision.This estimation method improves the comparability of the regression results of the extent and breadth of OFDI with the results of the OFDI intention decision estimated with the Probit model.Based on this,the dissertation empirically examines the impact of CEO career concerns on corporate OFDI and explores the agency problem embodied in the relationship,drawing on data from Chinese Ashare listed companies from 2003 to 2020.This study examines the efficiency of governance over CEO career concerns in the cross-border investment in terms of internal governance structures,namely shareholding structure and board structure.This dissertation dissects the heterogeneous governance role of the external governance environment on the relationship between CEO career concerns and corporate OFDI in terms of regional formal and regional informal institutions.Finally,this dissertation summarises the main research findings and innovations,and presents future research perspectives.The main findings of the dissertation are as follows.(1)The willingness,extent,and breadth of OFDI are lower for firms with higher CEO career concerns.Although such myopic behavior enhances future market value,it is detrimental to corporate financial performance,and CEOs’ career experiences in politics,overseas,and academia mitigate the disincentive effect of career concerns on OFDI to varying degrees.This dissertation explores the impact of CEO career concerns on corporate OFDI and clarifies the mechanisms underlying the relationship.The evidence shows that the increase in CEO career concerns inhibits the willingness,extent,and breadth of OFDI.The above view of myopic incentives is still supported after robustness tests that take into account endogeneity,other long-term investments such as innovation,and career factors.A test of the economic consequences of combining the excessive focus on performance by managers due to career concerns and the short-term performance pressures caused by OFDI found that the intervention of CEO career concerns on OFDI was not conducive to improving the future financial performance of the firm,but catered to investors and received positive market feedback.Considering the moderating effect of managers’ career experience,the results show that the local political experience,overseas study experience and diverse academic experience have a mitigating effect on the negative relationship between CEO career concerns and OFDI.(2)The structures of ownership checks and balances,executive equity incentives,and board independence and age diversity enhance the governance efficiency of the agency problems from CEO career concerns in OFDI.Board size and gender diversity only exhibit a governance effect of short-sighted incentives for CEO career concerns on corporate OFDI extent decisions.Foreign-owned and relatively concentrated shareholding structures exacerbate the short-sighted incentives for CEO career concerns.This dissertation dissects the moderating role of corporate internal governance structures on CEO career concerns affecting OFDI focusing on shareholding structure and board structure.The research demonstrates that higher equity concentration or lower equity checks and balances increase the alignment of interests between major shareholders and managers with higher career concerns,exacerbating the disincentive effect of CEO career concerns on corporate OFDI,which is not conducive to improving the efficiency of governance of managerial agency problems arising from CEO career concerns.Executive shareholding significantly improves governance efficiency by mitigating the inhibiting effect of CEO career concerns on OFDI.But foreign ownership does not show this role.The structural variable of board size does not effectively characterize the operating mechanisms among board members and fails to improve the relationship between CEO career concerns and corporate willingness and breadth of OFDI.The gender diversity of board members also mitigates the impact of CEO career concerns only in the context of corporate OFDI degree decisions.Higher board independence and an agediverse board composition can help improve the effectiveness of corporate governance of CEO career concerns in cross-border investment decisions.(3)Product market development,lower government intervention and increased regional rule of law help to reduce the disincentive effect of CEO career concerns on corporate OFDI.But factor market development and dialect diversity act in the opposite direction.This dissertation researches the effects of external governance environment and CEO career concerns on corporate OFDI from formal and informal institutions.The results indicate that the development of product markets accelerates inter-regional corporate competition and stimulates the market-seeking motives of OFDI,alleviating the interference of CEO career concerns on corporate OFDI.The development of factor markets can meet the development needs of firms and reduce the resource-seeking motives of OFDI,enhancing the inhibiting effect of CEO career concerns on corporate OFDI.Although government intervention acts as a "helping hand",an improved local business environment reduces the attractiveness of OFDI for managers with high-career concerns,reflecting the two-sided nature of government intervention.The regional rule of law regulates corporate governance mechanisms and effectively governs the interference of CEO career concerns in cross-border investment decisions.In the informal institutional environment,dialectal diversity increases the disincentive effect of CEO career concerns on corporate OFDI.