Date created: 2023-07-03 01:54 AM | Last Updated: 2023-07-26 09:48 AM

Category: Project

Description: Building on the literature on managerial myopia, we investigate how CEOs’ international experience in advanced market economies affects their firms’ investment horizons in a transitioning economy. To overcome myopia, CEOs should possess the knowledge needed to manage current tasks, thereby freeing up cognitive resources for future considerations. In the context of our theorizing, we argue that international experience in advanced market economies equips CEOs with knowledge about how to deal with their current tasks of market-oriented adaptation in a transitioning economy, freeing up cognitive resources for considering longer-term investment horizons. Additionally, the effect of CEO international experience in advanced market economies on firm investment horizon is stronger under conditions that increase the cognitive burden on CEOs to perform the market-oriented adaptation task: specifically, when there is a high scope of pro-market reform, high intensity of foreign competition, analyst coverage, and a high level of institutional ownership. Our estimation based on a matched sample of 204 Chinese CEOs during the period 2002-2019 generally supports our predictions. Our study contributes to research on firm investment horizon, CEO international experience, and transition economies.