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CEO financial background and corporate financialization

Author

Listed:
  • Kang, Dan
  • Xu, Jiahao
  • Tong, Qiye
  • Li, Jiayan

Abstract

Corporate financialization has become increasingly predominant; however, the impact of chief executive officers’ (CEOs’) characteristics on this trend remains underexplored. Although past studies have examined executive backgrounds, the effect of CEOs’ financial expertise on entity enterprises’ financialization levels is unclear. This study examined how CEOs’ financial backgrounds affect corporate financialization in Chinese A-share listed companies from 2008 to 2022. Using panel data and statistical techniques, we found that CEOs with financial backgrounds significantly promote corporate financialization. This effect is primarily mediated through increased managerial overconfidence and mitigated corporate financing constraints. The impact is more pronounced in non-state-owned and low-cash-flow firms. Our findings contribute to understanding how executive characteristics shape corporate financial strategies and offer insights for optimizing corporate governance and decision-making processes in an increasingly financialized business environment.

Suggested Citation

  • Kang, Dan & Xu, Jiahao & Tong, Qiye & Li, Jiayan, 2025. "CEO financial background and corporate financialization," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014119
    DOI: 10.1016/j.frl.2024.106382
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    References listed on IDEAS

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    4. Guo, Juanjuan & Sun, Hongfeng & Wang, Shihao & Liu, Chang, 2025. "Sword suppress virtual fire: Bank regulatory sanctions help companies shift from financial to real economic activities," International Review of Financial Analysis, Elsevier, vol. 108(PB).

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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