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Volume 22 No. 3, December 2023


Article History:
Received: 25 March 2023
Accepted: 27 August 2023
Available online: 01 December 2023


The Impact of CEO Characteristics and Political Connections on Investment Efficiency: Evidence from an Emerging Market

Marwan Altarawneh1♣, Wan Adibah Wan Ismail2 , Rohami Shafie3 , Khairul Anuar Kamarudin4 and Arumega Zarefar5

1Faculty of Business Studies, Arab Open University, Riyadh, Saudi Arabia
2Faculty of Accountancy, Universiti Teknologi MARA, Kedah, Malaysia
3Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia, Kedah, Malaysia
4School of Business, University of Wollongong in Dubai, Dubai, United Arab Emirates
5Faculty of Economics and Business, Universitas Riau, Pekanbaru, Indonesia


This study examined the influence of CEO characteristics including age, gender, honorific title, ethnicity, and founding role on investment efficiency. This study also investigated whether political connections moderated the relationship between CEO characteristics and investment efficiency. The sample included 1,572 firm year observations from Malaysia during the period 2014-2018. Financial data were retrieved from the Thomson Reuters database, while CEO attributes were collected from corporate annual reports. The findings suggested that firms with more experienced CEOs or Chinese CEOs had a higher investment efficiency. Firms led by experienced CEOs were less likely to engage in underinvestment or overinvestment strategies. Similarly, firms managed by Chinese CEOs exhibited higher investment efficiency but may have a higher tendency to either overinvest or underinvest. Furthermore, this study indicated that politically connected firms mitigate the negative impact of more experienced CEOs and Chinese CEOs on the likelihood of overinvestment. These findings have practical implications for investors by emphasising the importance of considering CEO traits and politically connected firms when making investment decisions.

Keywords: CEO characteristics, Political connections, Investment efficiency, Underinvestment, Overinvestment.
Corresponding Author: Marwan Altarawneh; Faculty of Business Studies, Arab Open University, Riyadh, Saudi Arabia; Email: This email address is being protected from spambots. You need JavaScript enabled to view it.


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