Does CFO Serving as a Director Improve Investment Efficiency? ——Evidence from Chinese listed Firms

Abstract

Abstract: In this paper, we examine the influence of CFO serving as a director on investment efficiency based on the sample of Chinese listed firms during the period 2004-2013. The study finds that CFO's directorship can improve investment efficiency and restrain inefficient investment behavior; the more adverse the external information environment is, the stronger influence CFO's directorship will have on the improvement of investment efficiency. Further study shows that a CFO's directorship has the maximum driving effect on investment efficiency by the 2^nd or 3^rd year of his or her directorship but has an inhibiting effect by the 5^th year. Finally, through quantile regression, it is found that the less efficient the current investment is, the stronger influence on investment efficiency will come from CFO serving as a director.

Key words: CFO, corporate governance, internal director, investment efficiency

Yuan Jianguo, Fan Wenlin, Cheng Chen, Xiao Huafang. Does CFO Serving as a Director Improve Investment Efficiency? ——Evidence from Chinese listed Firms[J]. , 2017, 29(3): 62-73.

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