Influence of CEO financial background on the efficiency of financial resource allocation

Abstract

Using panel data from A-share listed companies between 2010 and 2022, this study examines the impact of a CEO’s financial background on the efficiency of financial resource allocation. The paper assesses the efficiency of financial resource allocation from the debt perspective and empirically analyses the influence of CEO financial background on this allocation. Results show that a CEO’s financial background considerably improves the efficiency of financial resource allocation. The mechanism lies in the fact that such a background helps alleviate financing constraints by expanding the scale of equity and debt financing, thereby improving the efficiency of financial resource allocation. Further research on economic consequences reveals that a CEO’s financial background positively impacts the overall redistribution of financial resource by improving allocation efficiency, thus promoting a shift towards more effective resource allocation. Additionally, when measuring the efficiency of factor resource allocation from the asset side, the study confirms that a CEO’s financial background substantially improves the efficiency of factor resource allocation.

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