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Impact of CEO’s characteristics on investment decisions of Indian listed firms: Does crisis make any difference?

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  • Gaurav Gupta
  • Jitendra Mahakud
  • Byomakesh Debata

Abstract

Using a sample of listed Indian manufacturing companies, this study examines the role of chief executive officer’s (CEO’s) personal characteristics like age, tenure, education, and career experience in the determination of investment decisions of the firm. The dynamic panel data model estimation, more specifically the system generalized method of moments estimation results reveal a negative relation between CEO’s age and corporate investment. CEO’s financial education is positively associated with investment decisions. The investment cash flow sensitivity analysis posits that CEO’s age and financial education reduce the sensitivity of investment with respect to cash flow. The results are robust across different periods, defined on the basis of crises. In times of financial crisis, we document that firm’s liquidity and age, CEO’s career experience and tenure turn out to be significant determinants of corporate investment. This paper provides an out-of-sample evidence of the role of CEO’s personal characteristics on the determination of corporate investment, which is an unexplored issue from an emerging market perspective.

Suggested Citation

  • Gaurav Gupta & Jitendra Mahakud & Byomakesh Debata, 2018. "Impact of CEO’s characteristics on investment decisions of Indian listed firms: Does crisis make any difference?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1439258-143, January.
    • Handle: RePEc:taf:oaefxx:v:6:y:2018:i:1:p:1439258
    DOI: 10.1080/23322039.2018.1439258
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    Cited by:

    1. Quynh Trang Phan & Poomthan Rangkakulnuwat, 2022. "How price informativeness affects the sensitivity of investment-to-stock price in Vietnamese listed firms," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 12(1), pages 28-61.
    2. Moreno Domínguez, María Jesús & Martín Zamora, María Pilar & Serrano Czaia, Isabel & Rodríguez Ariza, Lázaro, 2022. "Reputation and leadership: a study about reputational transfer in family and non-family firms," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    3. Gaurav Gupta, 2022. "CEO's age and investment‐cash flow sensitivity," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2212-2224, September.
    4. Trustmore Bekapi, 2023. "Impact of Institutional Investors and Board Independence on Corporate Short-Termism: Longitudinal Evidence from Zimbabwe," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 1531-1552, September.
    5. Rupinder Kaur & Balwinder Singh, 2018. "CEOs’ Characteristics and Firm Performance: A Study of Indian Firms," Indian Journal of Corporate Governance, , vol. 11(2), pages 185-200, December.
    6. Tutun Mukherjee & Som Sankar Sen, 2022. "Impact of CEO attributes on corporate reputation, financial performance, and corporate sustainable growth: evidence from India," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-50, December.

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