CEO cultural background and overinvestment decisions: The north-south divide in China

Abstract

This study addresses an under-researched area in corporate behavior by examining the impact of a CEO’s cultural background on corporate overinvestment decisions. We focus on the unique cultural dichotomy between northern and southern China as our context of study. Additionally, we scrutinize the interactions between a CEO’s age and the type of company ownership in influencing overinvestment tendencies. Our aim is to enrich theoretical understanding of factors influencing corporate overinvestment, offering practical implications for businesses within and beyond China. By filling this gap in the literature, our study sheds light on the nuanced determinants of overinvestment decisions, aiding businesses in refining their investment strategies and governance mechanisms.