Date of Award


Degree Name

Doctor of Philosophy


Business Administration


Feixue Xie


The dissertation consists of two essays. The first essay investigates the relationship between CEO power and investment efficiency. I find that powerful CEOs reduce investment efficiency, and this investment inefficiency is mainly driven by overinvestment. The negative effect of CEO power on investment efficiency is more pronounced when information asymmetry, agency problems, and product market competition are strong. This negative effect is mitigated when operation complexity is high and when internal and external governance is strong. However, if the majority of the independent directors are co-opted, the positive impact of internal governance diminishes. I further find that inefficiency and overinvestment increase with CEO tenure, level of CEO power, and financial constraints. In addition, the inefficiency is more pronounced when the powerful CEOs are hired from outside. In the second essay, I document that subordinate executives' confidence and ability to monitor CEOs' actions increase corporate risk-taking. I also find that firms tend to increase their investments in capital expenditures, R&D, intangible assets, and advertising expenses to increase firm risk. These firms, however, reduce net leverage, hold more cash and increase equity issuance probably to finance the increased investments. Overall, my evidence shows that approximately 36% of return on assets volatility and 24% of cash flow volatility are channeled through these investment and financing decisions. I further show that the effectiveness of subordinate executives' confidence and ability is more pronounced in competitive and complex business environments where the subordinate executivesâ?? effort is more important. However, the presence of highly experienced but older executives and more powerful, and overconfident CEOs undermines this positive effect.




Received from ProQuest

File Size

126 p.

File Format


Rights Holder

Md Raihan Uddin Chowdhury

Available for download on Monday, October 07, 2024