IDEAS home Printed from https://ideas.repec.org/a/spr/jecfin/v49y2025i1d10.1007_s12197-024-09698-3.html
   My bibliography  Save this article

Powerful CFOs and investment efficiency

Author

Listed:
  • Md Kamrul Hasan Chy

    (University of Central Arkansas)

  • Obed Nana Buadi

    (The University of Texas at El Paso)

Abstract

We examine how powerful CFOs influence investment efficiency, addressing the gap in research on the role of CFO power in corporate financial decisions. Existing literature primarily focuses on CEO power, often highlighting its contribution to overinvestment, but the impact of CFO power is less understood. Using data from S&P 1500 firms from 2001–2019, we assess the relationship between CFO power and investment outcomes. Our results indicate that powerful CFOs tend to adopt conservative investment strategies, leading to underinvestment and negatively impacting investment efficiency. These results highlight the significant role of CFOs in shaping corporate investment policies and suggest that the power dynamics within the executive team can critically influence firm outcomes.

Suggested Citation

  • Md Kamrul Hasan Chy & Obed Nana Buadi, 2025. "Powerful CFOs and investment efficiency," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 49(1), pages 119-140, March.
    • Handle: RePEc:spr:jecfin:v:49:y:2025:i:1:d:10.1007_s12197-024-09698-3
    DOI: 10.1007/s12197-024-09698-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12197-024-09698-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12197-024-09698-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Powerful CFOs; Investment efficiency; Underinvestment; Overinvestment; Corporate governance; Product market;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jecfin:v:49:y:2025:i:1:d:10.1007_s12197-024-09698-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.