The University of Southampton
×
Filter your search:
University of Southampton Institutional Repository

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

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

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.

demographic characteristic, experience, financial expert, firm performance, investment efficiency, top management team
0306-686X
Li, Zhe
ee8b16f0-e581-4337-bdd1-b3afeae1b1d6
Pryshchepa, Oksana
bf457f09-09d3-4e76-b730-51394aae49e3
Wang, Bo
dc1fccae-55e8-4d28-8eb9-1c539247e940
Li, Zhe
ee8b16f0-e581-4337-bdd1-b3afeae1b1d6
Pryshchepa, Oksana
bf457f09-09d3-4e76-b730-51394aae49e3
Wang, Bo
dc1fccae-55e8-4d28-8eb9-1c539247e940

Li, Zhe, Pryshchepa, Oksana and Wang, Bo (2021) Financial experts on the top management team: do they reduce investment inefficiency? Journal of Business Finance & Accounting. (doi:10.1111/jbfa.12575).

Record type: Article

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.

Text
JBFA_Accepted_Version - Accepted Manuscript
Available under License University of Southampton Accepted Manuscript Licence.
Download (831kB)

More information

Accepted/In Press date: 2 November 2021
e-pub ahead of print date: 15 November 2021
Additional Information: Publisher Copyright: © 2021 John Wiley & Sons Ltd
Keywords: demographic characteristic, experience, financial expert, firm performance, investment efficiency, top management team

Identifiers

Local EPrints ID: 452652
URI: http://eprints.soton.ac.uk/id/eprint/452652
DOI: doi:10.1111/jbfa.12575
ISSN: 0306-686X
PURE UUID: c17d18f0-bfd1-403e-b75a-86962f941357
ORCID for Bo Wang: ORCID iD orcid.org/0000-0001-9417-2214

Catalogue record

Date deposited: 11 Dec 2021 11:30
Last modified: 17 Mar 2024 06:56

Export record

Altmetrics

Contributors

Author: Zhe Li
Author: Oksana Pryshchepa
Author: Bo Wang ORCID iD

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Library staff additional information
Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×