CEO职业忧虑与企业投资策略中的同业效应

CEO Career Concern and Peer Effect in Corporate Investment
Jin Xuejun, Xiao Yixin
School of Economics, Zhejiang University, Hangzhou 310027, China
Abstract

With the development of behavior finance, mutual influences and learning among the firms in the same industry has been a research hotspot. It is shown by a fact: the companies' investment strategies are influenced not only by their financial status, but also by their peers' investment decisions. Indeed, the impact of peer effect on corporate investment is nonnegligible. Career concern is one of the main motivations of the peer effect. Investigating the influence mechanism of the concern to that peer effect can help investors and companies accurately identify and effectively reduce the managers' haphazard investment. Moreover, how to measure the career concern is a key point to our research. Based on the three dominant proxy variables for the career concern, we draw four conclusions: Firstly, CEOs who desire to establish reputation in the industry are less likely to follow their peers (mimic their peers' investment decisions), while those who intend to maintain a great reputation they have owned in the industry are more likely to follow their peers. Secondly, young and newly appointed CEOs prefer personal investment strategies. Thirdly, CEOs are more likely to follow their peers when the firm's investment performance is worse than the median of the industry. Fourthly, CEOs tend to follow their peers if they could increase the probability to reappointment.
According to the rational herding model, most CEOs imitate their peers' investment decisions to relieve their career concern. In the labor market, CEOs' rewards and promotions are correlated with their relative performances rather than the absolute performances. Foreign scholars suggest that it is occasional to draw a successful personalized decision while a failure personalized decision will be attributed to the CEO's ideas. Hence, it is much wiser for CEOs to follow others rather than conducting independently. To compare with it, the structure of CEOs' rewards is defective and the ratio of performance reward is quite low in Chinese companies, which gives the CEOs no incentives to make personal investment decisions. Another stress is from the serious information opacity and policy uncertainty in the Chinese market. Under this condition, the optimal decisions are more time-consuming and difficult for them. Thus, mimicking peers' decisions can shrink the decision costs and reduce the risks.
By referring to most literatures in this field, the existing ones are merely reaching the level of discovering this phenomenon. However, nobody explores the generation mechanism of the peer effect. Our paper is the first to investigate the influence of the career concern on the peer effect. Through grouping the sample based on the CEO age, we find that an inverted U-shaped correlation between the peer effect and the CEO age, which means that only the CEOs who want to maintain their reputations in the industry are more likely to follow the peers. In contrast, for the CEOs who want to establish the reputations in the industry, personal strategies are more suitable. This finding suggests that peer effect is caused by the career concern pursuing stable relative investment performance and lower investment risks. In other words, not all the career concerns cause peer effect. Further, we respectively use CEO tenure and the performance pressures to measure career concern. According to the results, we find that CEOs who have been successfully reappointed or taking less performance pressures are more likely to follow their peers. These results are consistent with the conclusions from the basic regression, these CEOs need low-risk and stable relative performances to sustain their reputations in the industry. Furthermore, we classify the sample into four groups based on the CEO tenure and the performance pressures simultaneously. We find that only the CEOs who are reappointed and facing less performance pressures are more likely to take the follow strategies. For the CEOs who are newly appointed prefer personal investment strategies to establish their reputations regardless of the performance pressures. All the results provide the evidence that the career concern to maintain the reputations in the industry leads to the peer effect. Thus, our research confirms the correlation between the peer effect and the career concern and fills up the blank in the field of the generation mechanism of the peer effect.
Indeed, there is a serious endogeneity issue when using average investment as the independent variable. To solve this problem, we apply the 2SLS model and select idiosyncratic stock return and its standard deviation as the instrument variables. To construct the instrument variables, we apply the four-factor model to eliminate the impacts of external factors. To ensure the quality of the instrument variables, we examine the relevance criterion and exclusion criterion respectively. We believe our methods have minimized the effect of the endogeneity issue.

Keyword: peer effect; investment decision; career concern; position reappointment; investment performance

(一) 研究背景

(二) CEO年龄与任职情况对其投资风格的影响机制

(三) CEO绩效压力对其投资风格的影响机制

(一) 数据和样本

(二) 变量定义

(三) 描述性统计

(一) 研究设计

yijt=α +β $y--ijt$+γ Xijt-1+λ $X--ijt-1$+δ μ ijt+φ vijt+ρ θ ijt+ε ijt(1)

(二) 内生性问题检验

rijmijm$ijmEMT$× EMT$ijmSMB$× SMB$ijmHML$× HML$ijmMMR$× MMRijm(2)

$r∧ijm$= $α∧ijm$+ $β∧ijmEMT$× EMT+ $β∧ijmSMB$× SMB+ $β∧ijmHML$× HML+ $β∧ijmMMR$× MMR+η ijm(3)

$η∧ijm$=rijm- $r∧ijm$(4)

(一) 企业投资的同业效应

(二) 职业忧虑对同业效应的影响

(三) 稳健性检验

(四) 进一步研究

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