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The governance nexus: The impact of CFO-CEO collusion on controlling shareholders’ equity pledging

Author

Listed:
  • Li, Ziqi
  • Cai, Zhihao
  • Huang, Ho-Chuan

Abstract

This study examines the impact of CFO-CEO co-option on controlling shareholders’ equity pledging in Chinese A-share listed firms from 2003 to 2022. Findings indicate a significant positive relationship, as co-opted CFOs – those appointed after the CEO’s tenure begins – tend to align with CEO interests, facilitating higher pledge levels to meet short-term liquidity needs. Gender and tenure moderate this effect: female CFOs, despite being risk-averse, exhibit stronger influences due to compliance pressures, while newly appointed CFOs are more susceptible to CEO influence. External governance mechanisms, such as Big Four audits and concentrated market environments, mitigate this impact, whereas high information asymmetry exacerbates it. Additionally, financing constraints serve as a mediating mechanism, as co-opted CFOs heighten financial pressures, leading to increased equity pledging. These findings highlight governance risks associated with CFO co-option and provide policy insights for mitigating financial instability in emerging markets.

Suggested Citation

  • Li, Ziqi & Cai, Zhihao & Huang, Ho-Chuan, 2026. "The governance nexus: The impact of CFO-CEO collusion on controlling shareholders’ equity pledging," Research in International Business and Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:riibaf:v:82:y:2026:i:c:s0275531925005094
    DOI: 10.1016/j.ribaf.2025.103253
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    References listed on IDEAS

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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