The Empirical Study on CEO Power and Investment Efficiency

Abstract

Abstract. In the economic organization, CEO is the highest administrative official responsible for the routine business in an enterprise. The size of the CEO's power has great impact on CEO's decision making, and the interest of stakeholders. But, academia is inconsistent to the influence of CEO power, one is "power beyond" and the other is "power protection". "Power beyond" thinks too much power can let CEO give up the company's interests for personal gain. "Power protection" thinks high power of CEO is advantageous to the development of the company. This paper builds comprehensive measure CEO rights of four dimensions first, and examines that CEO power influence on investment efficiency with method of multivariate regression analysis, by using 2010-2014 data of Chinese listed companies. The conclusion shows that the greater the CEO power is, the higher the investment efficiency will be. This paper results support "power protection "and provide empirical evidence for the theory "power protection ".