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Financial knowledge, executive decision making and enterprise innovation

Author

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  • Zhang, Hao
  • Zhu, Yimeng

Abstract

This research examines the correlation between financial expertise and CEO decision-making and its impact on the creative output of 270 non-financial firms listed in China from 2005 to 2021. A regression study demonstrates a positive correlation between CEOs with extensive financial knowledge and their tendency to make choices that promote innovation. The study uncovers three primary discoveries: improved, innovative processes within companies led by financially literate executives; the magnifying impact of financial expertise on innovation during economic instability; and a gradual increase in this pattern, emphasizing the evolving importance of financial knowledge in the strategic choices that influence enterprise innovation in China's dynamic economic setting. Policy implications need focused initiatives to augment the financial literacy of CEOs, enabling them to make well-informed and creative decisions and strengthening the long-term competitiveness and sustainability of these firms at a worldwide level.

Suggested Citation

  • Zhang, Hao & Zhu, Yimeng, 2024. "Financial knowledge, executive decision making and enterprise innovation," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612323012977
    DOI: 10.1016/j.frl.2023.104925
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