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

Li, Zhe, Pryshchepa, Oksana ORCID: https://orcid.org/0000-0003-3785-8556 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. 10.1111/jbfa.12575

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Abstract

We examine the effect of 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 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:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Publisher:	Wiley
ISSN:	0306-686X
Date of First Compliant Deposit:	1 December 2021
Date of Acceptance:	2 November 2021
Last Modified:	15 Nov 2023 16:52
URI:	https://orca.cardiff.ac.uk/id/eprint/145520

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