CEO career horizon, corporate governance and corporate financial asset allocation: evidence from Malaysia

Purpose - This paper examines the relationship between CEO career horizon and corporate financial asset allocation while considering the moderating role of board independence and female directors. Design/methodology/approach - The study uses a quantile regression approach across 213 non-financial firms listed on Bursa Malaysia between 2015 and 2021. It addresses potential endogeneity through Propensity Score Matching (PSM) and the Generalized Method of Moments (GMM). Findings - The results show a positive relationship between CEO age and corporate financialization, suggesting that firms managed by CEOs with shorter career horizons tend to allocate more financial assets. Furthermore, the findings indicate that high board independence and high female board representation alleviate the positive relationship between CEO age and financial asset allocation. Practical implications - The empirical results have useful policy implications. For practitioners, the study emphasizes the importance of considering CEO qualities when choosing leaders and developing succession plans at the practical level of corporate governance processes. The research findings also provide policy implications for regulators and policymakers to undertake the necessary measures to optimize corporate governance standards and restrict managers’ short-termism. The study provides investors with insightful information about the possible relationship between CEO traits and company performance, especially with regard to measures for managing financial resources. Originality/value - This paper expands the existing research on corporate investment behavior and provides a new theoretical basis for the underlying factors of financial asset allocation. It studies the relationship between managerial traits and corporate financialization and deepens the understanding of CEO career horizon and companies’ financialization levels.