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The long game: CEO-CFO power dynamics and corporate debt maturity choices

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  • Li, Jiyuan
  • Li, Yicong
  • Yan, Lili
  • Zhao, Mengying

Abstract

We investigate how the power dynamics between CEOs and CFOs impact corporate debt maturity structures, focusing particularly on CFO co-option—when CFOs are appointed after the CEO's tenure begins. Using a comprehensive sample of S&P 1500 firms from 1996 to 2022, we find that companies with co-opted CFOs significantly favour longer-term debt maturities, a pattern that reduces external creditor oversight and reinforces CEO authority. This effect is particularly pronounced during the initial years of the CEO-CFO relationship, for specialist CFOs, in firms with weak external and internal monitoring mechanisms, and in companies led by CEOs approaching retirement. Through multiple robustness tests and alternative specifications, we consistently find that CEO influence manifests in financial policy decisions that potentially prioritize managerial interests over optimal governance structures. Our findings contribute to the growing literature on executive relationships and their impact on corporate financial policies, highlighting how subtle power dynamics between top executives can shape fundamental corporate decisions with significant governance implications.

Suggested Citation

  • Li, Jiyuan & Li, Yicong & Yan, Lili & Zhao, Mengying, 2026. "The long game: CEO-CFO power dynamics and corporate debt maturity choices," Pacific-Basin Finance Journal, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:pacfin:v:96:y:2026:i:c:s0927538x25003865
    DOI: 10.1016/j.pacfin.2025.103049
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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

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