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<p>Corporate investment inefficiency is plaguing financial markets around the world. Drawing on the upper echelons theory, this study examines the viability of CEO-CFO tenure consistency as a remedial measure of investment inefficiency. Using a sample of 19,194 firm-year observations of A-share Chinese listed firms from 2010 to 2023, we find that CEO and CFO tenure consistency makes firms investment efficient. Moreover, we also find that financial flexibility moderates the nexus between CEO-CFO tenure consistency and investment efficiency. Our results remain robust to alternative estimation methods and measures of investment efficiency. Heterogeneity analyses reveal a more pronounced effect of tenure consistency on investment efficiency for non-state-owned, high-market competition facing, large-sized, and high-growth firms. Channel analysis suggests that risk-taking level and financial reporting quality are the channels through which tenure consistency affects investment efficiency. This study advances the investment and top management scholarship by defining CEO-CFO tenure consistency as a type of relational governance within the top management team that facilitates efficient capital allocation. Unlike preceding studies that fixated on independent executive tenure, this study exhibits that overlapping CEO-CFO tenure boosts coordination, monitoring, and information integration at the top of the firm, leading to IE enhancement.</p>

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How CEO-CFO tenure consistency impact investment efficiency in Chinese firms? The role of financial flexibility

  • 期刊论文

  • 发表日期：

    2026年6月27日

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  • Muhammad Usman Arshad,
  • Mubashar Tanveer,
  • Fahad Najeeb Khan,
  • Muhammad Ansar Majeed

摘要

Corporate investment inefficiency is plaguing financial markets around the world. Drawing on the upper echelons theory, this study examines the viability of CEO-CFO tenure consistency as a remedial measure of investment inefficiency. Using a sample of 19,194 firm-year observations of A-share Chinese listed firms from 2010 to 2023, we find that CEO and CFO tenure consistency makes firms investment efficient. Moreover, we also find that financial flexibility moderates the nexus between CEO-CFO tenure consistency and investment efficiency. Our results remain robust to alternative estimation methods and measures of investment efficiency. Heterogeneity analyses reveal a more pronounced effect of tenure consistency on investment efficiency for non-state-owned, high-market competition facing, large-sized, and high-growth firms. Channel analysis suggests that risk-taking level and financial reporting quality are the channels through which tenure consistency affects investment efficiency. This study advances the investment and top management scholarship by defining CEO-CFO tenure consistency as a type of relational governance within the top management team that facilitates efficient capital allocation. Unlike preceding studies that fixated on independent executive tenure, this study exhibits that overlapping CEO-CFO tenure boosts coordination, monitoring, and information integration at the top of the firm, leading to IE enhancement.