Top Executives Power Gap and Corporate Investment Efficiency

Abstract

Abstract: Chairman-CEO separation is the important governance structure of listed companies. While the studies about power allocation between chairman and CEO are relatively insufficient. This paper attempts to describe the power distribution between the chairman and CEO from the perspective of power gap, and then investigate its impact on enterprise investment efficiency. The empirical results show that when the power gap between the chairman and CEO is larger, the investment efficiency is higher. Among the three dimensions of the power gap, the influence of the prestige power gap is the largest, followed by the ownership power gap, while the influence of the expert power gap is the weakest. Further, the effect of power gap on invest efficiency is more significant in non-state-owned enterprises, enterprises whose chairman receive compensation from listed companies and enterprises exposed to less government intervention. This paper enriches the literatures of corporate governance and investment efficiency from the perspective of power gap and also provides some reference for top management team construction.

Key words: chairman-CEO separation, power gap, investment efficiency

Duan Mengran, Wang Yutao, Xu Ruiyao. Top Executives Power Gap and Corporate Investment Efficiency[J]. Management Review, 2021, 33(8): 196-210.

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