The Impact Of CEO's Financial Work Experience On Corporate Financial Decision

In recent years,more and more domestic and foreign companies have begun to hire CEOs with financial background as executives of the company.From the specific practice of listed companies in China,between 2000 and 2013,listed companies with CEOs with financial background accounted for 5.5%of the total listed companies,and they showed a trend of rising and then stabilizing with the growth of time.Traditional behavioral finance research shows that the risk tolerance of executives will be affected by their background characteristics.The differences in risk tolerance and cognition between executives will lead to differences in the mental state of executives,which will make different financial decisions.Corporate financial decisions are not only affected by multiple internal and external factors,but also by differences in executive background characteristics.The background characteristics of executives have gradually become an important factor affecting corporate financial decisions.As the CEO of a company,the CEO plays a vital role in the Financial behavior and day-to-day operations of the company.Based on this,this paper relies on the relevant theories of behavioral finance,trying to study the relationship between the CEO's financial work background and corporate financial decision-making.This paper takes the CEO's work background as the entry point to study the relationship between financial work experience and corporate financial decision-making.Through the review of classical theory and literature,this paper proposes four research hypotheses.(1)CEOs with financial work experience,their companies have more fixed asset investment expenditures;(2)CEOs with financial work experience,their companies have higher asset-liability ratios;(3)CEOs with financial work experience The company has less cash holdings;(4)CEOs with financial work experience,and their companies have lower cash dividend payout rates.Based on the research hypothesis,this paper analyzes and verifies the impact of CEOs with financial work experience on corporate financial decisions through empirical research.Due to the different nature of the explanatory variables,in the empirical regression analysis,the fixed-effect panel regression is used for the models involved in the first three hypotheses,and the Tobit fixed-effect panel regression is used for the models involved in the fourth hypothesis.At the same time,in order to better explain the research problems,this paper has joined the state-owned enterprises and non-state-owned enterprises for comparative analysis.The study found that among state-owned and non-state-owned enterprises,CEOs with backgrounds in financial work experience have different effects on the impact of four financial decisions.In terms of investment decisions,the results of empirical research are consistent with the assumptions in this paper that CEOs with financial work experience will choose to increase their corresponding investment expenditures.However,in state-owned enterprises and non-state-owned enterprises,CEOs with financial work experience are negatively correlated with corporate investment expenditures.In terms of financing decisions,the results of empirical research are contrary to the assumptions of this paper,that is,CEOs with financial work experience tend to The lower debt level,this result has been verified in non-state enterprises.The difference is that CEOs with financial work experience in state-owned enterprises tend to have higher levels of liabilities;in terms of cash holdings,the results of empirical research are consistent with the assumptions in this paper that CEOs with financial work experience tend to hold less Cash,this result has been verified in state-owned enterprises.The difference is that CEOs with non-state-owned enteiprises with financial work experience tend to hold more cash;in the case of dividend payments,the results of empirical research are consistent with the hypothesis that CEOs with financial work experience are more inclined to lower dividend payments.Rate,this result has been verified in non-state-owned enterprises.The difference is that CEOs with state-owned enterprises with financial work experience tend to have higher dividend payout rates.According to the research conclusions of the article,this paper mainly proposes corresponding policy recommendations from the government level and the enterprise level.At the government level:macroeconomic policies adapted to market development should be formulated according to the current domestic and international economic situation,and the development of state-owned enterprises should be guided through market orientation,so that state-owned enterprises can drive non-state-owned enterprises.At the same time,the government should also strengthen the supervision and management of the state-owned enterprise management.on this basis to train and select professional,high-quality enterprise management talents,enrich the talent diversity of corporate management.At the enterprise level:(1)Combine its short-term and long-term goals,and choose the CEO that matches it according to its own business development characteristics;(2)In actual corporate governance,the management of the company should strengthen the supervision and inspection of the CEO's decision-making,avoiding its personal psychological factors causing unnecessary losses to the enterprise,urging it to review the situation and making the most favorable financial decisions for the enterprise;(3)In the specific practice of corporate governance,enterprises need to constantly improve the supervision and balance mechanism of the shareholders' meeting and the management,and gradually realize the established goals of the enterprise while ensuring the smooth operation of the enterprise.