Nguyen, Thanh Huong; Ha, Phuoc Vu
A icle
CEO o eign expe ience and i m le e age: e idence om
Vie nam
Cogen Business & Managemen
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CEO o eign expe ience and fi m le e age:
e idence om Vie nam
Thanh Huong Nguyen & Phuoc Vu Ha
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ACCOUNTING, CORPORATE GOVERNANCE & BUSINESS ETHICS |
RESEARCH ARTICLE
Cogen Business & ManageMen
2024, VoL. 11, no. 1, 2401156
CEO o eign expe ience and i m le e age: e idence om Vie nam
Thanh Huong Nguyen and Phuoc Vu Ha
uni e si y o economics, he uni e si y o Danang, Da nang, Vie nam
ABSTRACT
The s udy examines whe he CEOs wi h o eign expe ience a ec he co po a e inancing
decisions in he Vie namese ma ke . Fo eign-expe ienced CEOs a e de ined as hose who
wo ked and/o s udied ab oad be o e e u ning o Vie nam. Using a unique, manually
collec ed da ase o 322 non- inancial i ms lis ed on he Ho Chi Minh s ock exchange
(HOSE) om 2013 o 2021, we ind ha CEOs wi h in e na ional expe ience a e associa ed
wi h lowe inancial le e age, sugges ing ha such leade s gene ally p e e less inancial
isk compa ed o hei pee s. We p opose ha his conse a ism is likely due o hei
limi ed local ne wo ks and he weak ins i u ional amewo k in Vie nam, which mi iga e
he bene i s o hei global expe ise. Ou indings suppo he no ion om exis ing
li e a u e ha a sca ci y o social connec ions may cause CEOs o become mo e
isk-a e se, p omp ing hem o choose mo e conse a i e inancial decisions.
1. In oduc ion
Resea ch on op manage s, especially CEOs, has signi ican ly inc eased due o hei no able in luence on
co po a e beha io . Exis ing li e a u e demons a es how manage s’ a ied backg ounds shape hei pe -
spec i es and s a egic choices, pa icula ly no ing he ole o CEOs’ in e na ional expe ience. Ex ensi e
esea ch con i ms ha CEOs wi h o eign expe ience a ec a ious co po a e ou comes including in e -
na ional in ol emen (Sambha ya, 1996), pe o mance (Gianne i e al., 2015), social esponsibili y (Zhang
e al., 2018), inno a ion (Yuan & Wen, 2018), in es men e iciency (Dai e al., 2018), and ax a oidance
(Wen e al., 2020). Ye , he impac o such expe ience on co po a e isk- aking, like i m le e age deci-
sions, is s ill con o e sial.
CEOs wi h o eign expe ience may in luence i m le e age in con as ing ways. On he one hand, CEO
o eign expe ience is co ela ed wi h imp o ed co po a e go e nance, which migh encou age he adop-
ion o mo e agg essi e inancial policies (Gianne i e al., 2015). The ‘eyeball e ec ’ u he posi s ha
hese CEOs unde in ense public and go e nmen sc u iny migh pu sue iskie s a egies o achie e
highe e u ns. Mo eo e , he challenges associa ed wi h li ing o s udying ab oad can educe pe sonal
isk a e sion, po en ially inc easing hei willingness o ake on co po a e isks like highe i m le e age
(Li e al., 2013). On he o he hand, o eign-expe ienced CEOs migh become mo e isk-a e se due o he
lack o obus local social ne wo ks, which a e c ucial o na iga ing domes ic business en i onmen s and
secu ing s akeholde suppo . This weakness can lead o eign-expe ienced CEOs o a mo e cau ious
app oach wi h lowe le e age (Fe is e al., 2017; Su e al., 2023). The ca ee conce n model also sugges s
ha conce ns o e u u e ca ee p ospec s migh p omp o eign-expe ienced CEOs o a oid isks due o
poli ical mo i a ions, leading o mo e conse a i e le e age selec ions. Fu he mo e, access o in e na-
ional capi al ma ke s may dec ease hese CEOs’ eliance on local deb , enabling hem o explo e less
le e age-dependen inancing op ions (Almeida & Wol enzon, 2006).
© 2024 he au ho (s). Published by in o ma uK Limi ed, ading as aylo & F ancis g oup
CONTACT hanh Huong nguyen huongn @due.edu. n uni e si y o economics, he uni e si y o Danang, Da nang, Vie nam
h ps://doi.o g/10.1080/23311975.2024.2401156
his is an open access a icle dis ibu ed unde he e ms o he C ea i e Commons a ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. he e ms on which his a icle has been
published allow he pos ing o he accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
ARTICLE HISTORY
Recei ed 20 June 2024
Re ised 17 July 2024
Accep ed 1 Sep embe
2024
KEYWORDS
CEO o eign expe ience;
i m le e age; co po a e
go e nance; PSM
app oach; Vie nam
SUBJECTS
Co po a e Finance;
Co po a e Go e nance;
Leade ship
2 T. H. NGUYEN AND P. V. HA
S udying and wo king ab oad has cu en ly become a end among Vie namese, wi h app oxima ely
40,000 s uden s1 annually choosing coun ies like he US, UK, Aus alia, and o he Eu opean na ions o
hei educa ion. In addi ion, in pu sui o becoming a de eloped coun y wi h a ela i ely high income
by 2045, Vie namese go e nmen policies encou age hese globally expe ienced indi iduals o apply
hei skills domes ically o aid na ional de elopmen .2 A 2021 su ey by ec ui men consul ancy Robe
Wal e s indica es ha 70% o o e seas Vie namese a e ac i ely conside ing e u ning o hei homeland
o new job oppo uni ies.3 Despi e his eme ging end, esea ch on he impo ance o o eign-expe ienced
CEOs in Vie nam emains sca e. Ou s udy is likely o be he i s in Vie nam o explo e he e ec s o
CEO o eign expe ience on i m le e age. Fu he mo e, while much exis ing esea ch ocuses on China,
ou s udy add esses he unique economic and cul u al con ex s o Vie nam, hus con ibu ing aluable
insigh s o he b oade esea ch ield.
In his s udy, we explo e he impac o CEO o e seas expe ience on i m le e age in Vie nam, illing
he gap in he exis ing li e a u e ega ding CEO o eign expe ience in his speci ic ma ke . We de ine
CEOs wi h o eign expe ience a e hose who ha e wo ked and/o s udied ab oad be o e e u ning o
Vie nam. Ou analysis ocuses on wo measu es o i m le e age: book le e age and ma ke le e age.
Using a unique, manually collec ed da ase o 322 non- inancial i ms lis ed on he Ho Chi Minh s ock
exchange (HOSE) om 2013 o 2021, we ind ha CEO o eign expe ience is signi ican ly and nega i ely
co ela ed wi h bo h ypes o i m le e age. This inding sugges s ha such CEOs a e mo e isk-a e se
han hei pee s, po en ially due o hei limi ed local ne wo ks and Vie nam’s weak ins i u ional ame-
wo k, which may dilu e he ad an ages o hei global expe ise. The absence o obus social ne wo ks
can be a signi ican disad an age o o eign-expe ienced CEOs, pushing hem owa ds mo e cau ious
co po a e decisions, including op ing o lowe le e age. Fu he mo e, un amilia i y wi h he local co po-
a e cul u e and managemen philosophies may pose challenges in ga ne ing suppo om local employ-
ees, con ibu ing o a lack o con idence and inc eased isk a e sion among hese leade s. Ou esea ch
enhances he unde s anding o how o eign expe ience impac s CEO le e age decisions and con ibu es
o he deba e on he e ec s o such expe ience on co po a e isk- aking. Addi ionally, i o e s aluable
insigh s o in es o s and i ms conside ing hi ing CEOs wi h in e na ional backg ounds, con ibu ing o
he b oade li e a u e on he Uppe Echelons Theo y, which asse s ha a CEO’s pe sonal a ibu es can
in luence i m beha io s.
The emainde o he pape is s uc u ed as ollows. Sec ion 2 p esen s he ela ed li e a u e and
hypo heses de elopmen . Sec ion 3 desc ibes he da a and me hodology. Sec ion 4 p o ides empi ical
esul s and discussion, and he conclusion is p esen ed in Sec ion 5.
2. Li e a u e e iew and hypo hesis de elopmen
2.1. Li e a u e e iew
This pape ela es o wo majo li e a u e s eams: he impac o CEO cha ac e is ics on i m le e age,
and he ole o CEOs wi h o eign expe ience in shaping co po a e ou comes.
2.1.1. Impac o CEO cha ac e is ics on i m le e age
The Uppe Echelons Theo y, in oduced by Hamb ick and Mason in 1984, posi s ha a i m’s s a egic
decisions and pe o mance a e signi ican ly in luenced by he obse able expe iences and psychological
ai s o i s CEOs and op execu i es. This heo y asse s ha he leade s’ backg ounds, expe iences, al-
ues, and pe sonal cha ac e is ics shape hei pe cep ions and in e p e a ions o si ua ions, di ec ly impac -
ing hei s a egic choices and ac ions (Hamb ick, 2007). Due o he challenge o acqui ing da a on
execu i es’ cogni ion, alues, and pe cep ions (Nielsen, 2010), obse able demog aphic a ibu es (e.g.
educa ion, age, enu e, and p o essional expe ience) may se e as eliable p oxies o hei psychological
ai s (Ca pen e e al., 2004).
Le e age is a key indica o o a i m’s iskiness, wi h highe le els associa ed wi h g ea e inancial
dis ess and de aul isk (Faccio e al., 2016; Molina, 2005). P e ious li e a u e shows ha co po a e le e -
age decision could be explained by CEO ai s (G aham e al., 2013) such as age (e.g. Se ling, 2014),
gende (e.g. Faccio e al., 2016), expe ience (e.g. Cus ódio & Me zge , 2014; Güne e al., 2008), educa ion
COGENT BUSINESS & MANAGEMENT 3
(e.g. Be and & Schoa , 2003), powe (e.g. Ko keamäki e al., 2017), and social capi al (Fe is e al., 2017).
Fo example, Faccio e al. (2016) ind ha emale CEOs end o op o lowe le e age, suppo ing he
no ion ha women may be less isk- ole an and less con iden han male. CEOs wi h highe educa ion
a e less isk-a e se and mo e ecep i e o new ideas, changes, and in es men oppo uni ies (Ba ke &
Muelle , 2002), hey he e o e employ mo e agg essi e inancial s a egies (Be and and Schoa , 2003),
including highe inancial le e age (Rakhmayil & Yuce, 2011). Fe is e al. (2017) ind a posi i e ela ion
be ween CEO social capi al and inancial le e age and a gue ha social ne wo ks enhance hei
isk- ole ance. Cus ódio and Me zge (2014) demons a e ha inancial expe CEOs a e likely o main ain
highe deb a io. They show ha CEOs wi h inancial expe ience possess skills, exhibi g ea e sophis i-
ca ion in applying inance heo y, and ha e be e access o capi al ma ke s han o he s, e en du ing
c isis pe iods (Güne e al., 2008).
In he con ex o Vie nam, mos o esea ch ocuses on he impac o i m cha ac e is ics on capi al
s uc u e (e.g. T ương & Võ, 2008; Hanh, 2019). Rega ding he e ec o CEO cha ac e is ics on i m le e -
age, Minh Ha e al. (2021) use a da ase o 110 i ms lis ed on he Ho Chi Minh S ock Exchange and he
Ha Noi S ock Exchange, and documen ha younge CEOs, male CEOs, high expe ienced CEOs, and CEOs
wi h highe educa ion a e mo e likely o use ex e nal inancing han hei coun e pa s. Anh and An
(2023) analyze a sample o 694 Vie namese lis ed i ms, and show ha high expe ienced CEOs educe
he adjus men speed owa d he a ge le e age. Yen (2020) inds ha CEO inancial expe ience in lu-
ences he ela ionship be ween cash low ola ili y and capi al s uc u e.
2.1.2. The ole o CEOs wi h o eign expe ience
Fo eign expe ience is one o CEOs’ obse able a ibu es. The Uppe Echelons heo y sugges s ha CEO
in e na ional expe ience may accoun o a ia ions in i m pe o mance and business ac i i ies (Hamb ick
& Mason, 1984). P e ious li e a u e shows ha he p esence o o e seas- e u ned CEOs helps connec
domes ic i ms o global ma ke s, inc easing i m expo o ien a ion (Fila o che e al., 2009), and p o id-
ing a compe i i e ad an age in he global landscape (Ca pen e & F ed ickson, 2001; Daily e al., 2000).
CEOs wi h in e na ional expe ience enhance in o ma ion anspa ency and in es men e iciency (Dai
e al., 2018), acili a e esea ch and de elopmen ac i i ies, and p omo e co po a e social esponsibili y
ini ia i es (Quan e al., 2021; Yuan & Wen, 2018; Zhang e al., 2018). Gianne i e al. (2015) ind ha i ms
led by o eign-expe ienced CEOs exhibi highe pe o mance compa ed o hei coun e pa s.
CEO o e seas expe ience also impac s i m isk- aking beha io s, including decisions ela ed o inan-
cial le e age. Sun e al. (2023) obse e ha o eign-expe ienced manage s in Chinese i ms end o
inc ease co po a e isk- aking h ough highe ope a ing le e age. They a ibu e his endency o
ad anced managemen p ac ices and imp o ed co po a e go e nance in oduced by hese CEOs. Sun
e al. (2023) also ind ha in s a e owned en e p ises, in e na ionally expe ienced CEOs a e associa ed
wi h lowe i m isk- aking, as hey ocus mo e on s eng hening hei poli ical connec ions and secu ing
u u e p omo ions a he han maximizing i m weal h. Siew-Boey and Hooy (2021) examine he in lu-
ence o o eign educa ion and wo king expe ience on CEO isk- aking beha io s wi hin he Malaysian
ma ke . Thei indings indica e ha CEOs wi h o eign educa ion end o exhibi highe isk- aking wi h
inc eased R&D spending and le e age. This p opensi y is linked o he sho e du a ion ab oad o edu-
ca ional pu poses, which allows o eign-expe ienced CEOs o e ain a s ong adap a ion o local cul u e
and possess highe ole ance o isks. In con as , CEOs wi h o eign wo king expe ience demons a e
lowe le els o isk- aking, possibly due o being less accus omed o domes ic business p ac ices and
changes in he home coun y a e a p olonged absence (Nielsen & Nielsen, 2013; Yuan & Wen, 2018). In
addi ion, CEOs wi h educa ional backg ounds om OECD coun ies exhibi highe le els o isk- aking,
sugges ing ha knowledge ans e om de eloped coun ies is pa icula ly e ec i e o Malaysian CEOs
who ha e pu sued hei educa ion in hese coun ies.
The ole o CEOs wi h o eign expe ience in he Vie namese ma ke has no been ex ensi ely s udied.
Huong and Vu (2023) employ a da ase o non- inancial i ms lis ed on he Ho Chi Minh s ock ma ke , and
indica e ha i ms led by in e na ionally expe ienced CEOs ou pe o m hei coun e pa s. Focusing on he
e ec o o eign di ec o s on i m pe o mance, Nguyen (2023) inds ha he p esence o o eign di ec o s
on he boa d also imp o es i m pe o mance. In con as , Vo e al. (2020) epo ha i ms wi h o eign
CEOs unde pe o m compa ed o hose wi h domes ic CEOs. This unde pe o mance is a ibu ed o he
4 T. H. NGUYEN AND P. V. HA
o eign CEOs’ lack o unde s anding o he local cul u e and business en i onmen , which is c i ical in a
ma ke like Vie nam whe e local knowledge is o en key o business success. Despi e hese s udies, no
esea ch has ye in es iga ed he e ec o CEO o eign expe ience on i m le e age in his eme ging ma ke .
2.2. Hypo hesis de elopmen
Cu en esea ch p esen s wo opposi e iewpoin s ega ding he impac o CEO o eign expe ience on
co po a e le e age.
On he one hand, exis ing li e a u e shows ha o eign expe ience enhances co po a e go e nance
(Gianne i e al., 2015), which can esul in mo e agg essi e inancial policies as be e go e nance sys-
ems encou age manage s o ake isks (Sun e al., 2023). In addi ion, om he ‘eyeball e ec ’ pe spec-
i e, CEOs wi h o eign expe ience, who ecei e signi ican a en ion om he go e nmen and public,
may pu sue iskie s a egies o achie e highe e u ns (Yuan & Wen, 2018). Mo eo e , p io s udies indi-
ca e challenges and unce ain ies associa ed wi h s udying o li ing ab oad (e.g. highe cos s, cul u al
di e ences, and lea ing one’s com o zones) may dec ease pe sonal isk a e sion (Li e al., 2013). This
educed a e sion o isk may posi i ely in luence hei willingness o engage in co po a e isk- aking,
including he adop ion o highe i m le e age.
On he o he hand, o eign-expe ienced CEOs may be mo e isk-a e se due o hei limi ed local
esou ces, such as social ne wo ks.4 The lack o local ne wo ks may lead o eign-expe ienced CEOs o
adop less isky s a egies, like a oiding inc eased le e age. In addi ion, highe co po a e isk due o
le e age also ele a es manage s’ ca ee isks wi h g ea e ca ee u no e a es (Gilson, 1989; Nini e al.,
2012) and educed p ospec s o u u e employmen (Eckbo & Tho bu n, 2003; Gilson, 1989). The ca ee
conce n model sugges s ha o eign expe ienced CEOs, mo i a ed by u u e p omo ion p ospec s, may
ake ewe isks due o poli ically mo i a ed ca ee conce ns. Fu he mo e, access o in e na ional capi al
ma ke s may dec ease hei eliance on local deb , allowing hem o conside less le e age-dependen
inancing op ions (Almeida & Wol enzon, 2006).
Vie nam is a coun y wi h he weak ins i u ions whe e business hea ily elies on social ies. Re u nees
ace limi ed oppo uni ies o in oduce inno a i e and di e se expe iences in Vie namese i ms, which a e
go e ned by na ional policies and deeply in luenced by he local wo king cul u e. In addi ion, Vie nam’s
apid social and economic de elopmen esul s in swi changes ha can pose challenges o
o eign-expe ienced CEOs a emp ing o ein eg a e in o he local labo ma ke (Pham & Sai o, 2020). The
lack o social connec ions and un amilia i y wi h local cul u e may lead hese o eign-expe ienced CEOs
o become mo e isk-a e se, consequen ly op ing o mo e conse a i e inancial decisions. The e o e, we
hypo hesize ha :
H1: Ce e is pa ibus, i ms led by CEO wi h o eign expe ience display lowe le e age han hei coun e pa s.
3. Resea ch design
3.1. Da a
We compile a da ase o non- inancial, publicly lis ed i ms om he Ho Chi Minh S ock Exchange (HOSE)
co e ing 2013 o 2021. The da ase includes in o ma ion on CEO cha ac e is ics such as o eign expe i-
ence, age, gende , expe ience, and CEO duali y ga he ed om publicly accessible co po a e go e nance
epo s. Financial da a a e ob ained om Compus a , a de ailed da abase o inancial and ma ke in o -
ma ion on global i ms, including hose in Vie nam. Consis en wi h p io esea ch, we exclude inancial
sec o i ms like banks and insu ance companies. The inal sample includes 322 unique Vie namese i ms,
yielding 2292 obse a ions.
3.2. Model
To explo e he e ec o CEO o eign expe ience on i m le e age, we employ he ollowing OLS model:
Le e age Fo eign Con ols
i i i i
,
,, ,
_
= + + + ++
ββ δ ϑ γζ
01 Exp ind (1)
COGENT BUSINESS & MANAGEMENT 5
whe e he dependen a iable,
Le e age
I , , e e s o he le e age o i m
i
in yea
. in ou analysis, we measu e i m
le e age using wo al e na i e p oxies: book le e age and ma ke le e age. he a iable
Fo eign_Exp
cap u es he
Ceo’s o eign expe ience. Con ol a iables include
CEO Age
,
CEODuali y
,
CEOExpe ience
,
CEOGende
,
Capex
,
Size
,
ROA
, and
SalesG ow h
. o add ess po en ial biases due o unobse ed he e ogenei y ac oss indus ies and ime, we
inco po a e indus y ixed e ec s (
ϑ
ind
) and yea ixed e ec s (
‡
) in o he model. he e o e m o he model, deno ed
by
ζ
i
,, cap u es he unobse ed in luences on le e age ha a e no explained by he model a iables. he de ini ion o
all a iables employed in he esea ch is summa ized and p esen ed in able 1.
3.3. Va iable cons uc ion
3.3.1. Fi m le e age
Following p e ious s udies (e.g. Bae e al., 2011; Be ge & DeYoung, 1997), we employ wo a iables o
measu e he le e age o lis ed i ms. Speci ically, book le e age (
BLe e age
) is compu ed as he a io o
he book alue o o al deb o he book alue o o al asse s. Ma ke le e age (
MLe e age
) is calcula ed
by di iding he o al deb by he sum o he book alue o o al deb and he ma ke alue o equi y.
The ma ke alue o equi y is de e mined by mul iplying he o al numbe o sha es ou s anding by he
cu en s ock p ice.
3.3.2. CEO o eign expe ience
We build ou a iable o CEO o eign expe ience (
Fo eign_Exp
) as a dummy a iable. This a iable equals
one i he CEO o he i m has o eign expe ience, and ze o o he wise. We de ine a CEO as ha ing o eign
expe ience i he/she wo ked and/o s udied o e seas be o e e u ning o Vie nam.
3.3.3. Con ol a iables
The model employs a numbe o i m-le el con ol a iables. We ollow p io s udies (e.g. Cus ódio &
Me zge , 2014; Faccio e al., 2016) o con ol o he pe sonal cha ac e is ics o he CEO and he i m’s
a ibu es ha ha e shown o in luence he co po a e inancing choices. The a iables include:
•
CEO Age
is he age o he CEO.
•
CEODuali y
is a dummy a iable, which akes he alue o one i he CEO is also chai man o he
boa d, and ze o o he wise.
•
CEOExpe ience
is de ined as he numbe o yea s he CEO has held he CEO posi ion a he cu en
and p e ious i ms.
•
CEOGende
is a dummy a iable, which akes he alue o one i a i m’s CEO is emale, and ze o
o he wise
•
Capex
is exp essed as he i m’s capi al expendi u e scaled by o al asse s.
Table 1. De ini ion o a iables.
Va iable Desc ip ion
i. Le e age
BLe e age
Book le e age, calcula ed as he a io o he book alue o o al deb o he book alue o o al asse s
MLe e age
Ma ke le e age, calcula ed as he a io o o al deb o he sum o he book alue o o al deb and he ma ke
alue o equi y
ii. Ceo cha ac e is ics
Fo eign_Exp
Dummy a iable, which akes he alue o 1 i he Ceo has o eign expe ience, and 0 o he wise
CEO Age
he age o he Ceo
CEODuali y
Dummy a iable, which akes he alue o 1 i he Ceo is also chai man o he boa d, and 0 o he wise
CEOExpe ience
he numbe o yea s he Ceo has held he Ceo posi ion a he cu en and p e ious i ms
CEOGende
Dummy a iable, which akes he alue o one i a i m’s Ceo is emale, and ze o o he wise
iii. Fi m cha ac e is ics
Capex
Capi al expendi u e scaled by o al asse s
Size
na u al loga i hm o he i m’s o al asse s
ROA
Re u n on asse s
SalesG ow h
sales g ow h, calcula ed as he annual pe cen age change in he alue o i m sales
6 T. H. NGUYEN AND P. V. HA
•
Size
is calcula ed as he na u al loga i hm o he i m’s o al asse s.
•
ROA
is he e u n on asse s.
•
Sales G ow h
is compu ed as he annual pe cen age change in he i m sales.
All con inuous a iables a e winso ized a 1% a bo h ails o educe he in luence o ou lie s on he
eg ession esul s.
4. Resul s and discussion
4.1. Summa y s a is ics
Table 2 epo s he desc ip i e s a is ics o he da a sample in ou analysis. The a e age le els o book
le e age and ma ke le e age o lis ed i ms a e espec i ely 26.32% and 35.15%. The mean alue o
Fo eign_Exp is 0.11, indica ing ha only 11% o i ms a e led by CEOs wi h o eign expe ience. Also,
11% o he CEOs in he sample a e emale. Table 1 also shows ha he a e age age o CEOs in he
sample is 50. On a e age, a CEO holds his/he CEO posi ion ac oss all i ms o a du a ion o 6.66 yea s.
In e m o p o i abili y, i ms in he Vie namese ma ke exhibi an a e age ROA o 7.03%. The annual
sales g ow h a e o he mean i m is 15.10%. A e age capi al expendi u es ep esen 4.68% o he i ms’
o al asse s.
The Pea son co ela ion coe icien ma ix o independen a iables used in ou esea ch is p esen ed
in Table 3. The alues o co ela ion among independen a iables a e low, anging om –0.10 (co ela-
ion be ween
CEOExpe ience
and
Capex
) o 0.45 (co ela ion be ween
CEOExpe ience
and
CEO Age
). The
conce n abou mul i-collinea i y, he e o e, could be mi iga ed (Guja a i, 2003).
4.2. CEO o eign expe ience and i m le e age
To examine whe he o eign expe ience o CEOs exe s impac s on he co po a e inancing decisions, we
eg ess ou measu es o i m le e age on CEO o eign expe ience and o he d i e s o i m le e age.
Table 2. Desc ip i e s a is ics.
Va iable n Mean
s anda d
de ia ion Min 25 h Pc l Median 75 h Pc l Max
BLe e age
2292 26.32 16.70 0.00 12.77 24.32 38.35 74.95
MLe e age
2292 35.15 23.03 0.20 15.43 34.19 52.34 84.55
Fo eign_Exp
2292 0.11 0.31 0 0 0 0 1
CEO Age
2224 49.63 8.21 24 44 50 56 78
CEO Duali y
2292 0.24 0.42 0 0 0 0 1
CEO Expe ience
2247 6.66 6.13 0 2 5 10 37
CEO Gende
2283 0.11 0.31 0 0 0 0 1
Capex
2285 4.68 6.14 0 0.58 2.33 6.26 32.28
Size
2292 28.32 1.35 25.50 27.36 28.15 29.11 33.69
ROA
2279 7.03 5.88 −11.40 3.39 6.07 9.57 32.56
Sales G ow h
1970 15.10 52.66 −72.91 −9.04 7.11 23.35 314.39
Table 3. Pea son co ela ion coe icien ma ix o independen a iables.
Va iable
Fo eign Exp
_
CEO
Age
CEO
Duali y
CEO
Expe ience
CEO
Gende
Capex
Size
ROA
Sales
G ow h
Fo eign Exp
_1
CEO Age
0.07*** 1
CEO Duali y
0.09*** 0.16*** 1
CEO Expe ience
0.09*** 0.45*** 0.30*** 1
CEO Gende 0.09*** −0.07*** 0.09*** 0.10*** 1
Capex
−0.06*** −0.04* −0.05** −0.10*** 0.04* 1
Size
0.17*** 0.04* −0.09*** −0.02 0.09*** 0.08*** 1
ROA
0.05** 0.08*** −0.03 −0.01 0.01 0.14*** 0.05** 1
Sales G ow h
−0.001 −0.07*** 0.04 −0.01 −0.01 0.05** 0.07*** 0.10*** 1
COGENT BUSINESS & MANAGEMENT 7
Es ima ion esul s a e epo ed in Table 4. Book le e age is he dependen a iable in Panel A and ma ke
le e age is he dependen a iable in Panel B. We ind ha he coe icien es ima es o
Fo eign_Exp
a e
nega i e and s a is ically signi ican in all columns. A e accoun ing o he impac o o he de e minan s
o capi al s uc u e choices, he book (ma ke ) le e age o i ms led by o eign-expe ienced CEOs is 3.71%
(6.29%) lowe han he book (ma ke ) le e age o i ms un by CEOs lacking his expe ience. This esul
is in line wi h Siew-Boey and Hooy (2021) and Sun e al. (2023), and suppo s H1 which p edic a neg-
a i e ela ion be ween he o eign expe ience o CEOs and i m le e age. In he con ex o an eme ging
coun y wi h he weak legal ins i u ions like Vie nam, he lack o social ne wo ks migh be he dominan
disad an age ha akes o eign-expe ienced CEOs o mo e p uden co po a e decisions including lowe
le e age choices. In addi ion, being un amilia wi h co po a e cul u e and managemen philosophy migh
lead hem o ace di icul ies in gaining suppo om local employees, making hem less con iden and
mo e isk-a e se.
In e ms o o he CEO cha ac e is ics ha migh a ec he i ms’ le e age, he esul s show ha , con-
sis en wi h p io s udies, CEO expe ience ends o be associa ed wi h lowe deb a io (e.g., Cus ódio &
Me zge , 2014). By con as , younge CEO end o adop lowe i m le e age, in line wi h p e ious
esea ch sugges ing ha hese CEOs ace g ea e isk o being i ed ollowing poo pe o mance (e.g.,
Che alie & Ellison, 1999; Hong e al., 2000). The esul s also show ha CEO duali y is posi i ely co -
ela ed wi h i m le e age. As o i m a ibu es, we ind ha la ge i ms, i ms wi h highe g ow h
oppo uni ies and capi al expendi u es end o ha e highe le e age. In he meanwhile, i ms wi h high
p o i abili y a e likely o bo ow less han o he i ms (Faccio e al., 2016).
4.3. Robus ness checks
To enhance he obus ness o ou indings, we conduc addi ional es s add essing endogenei y, includ-
ing he use o lagged mili a y expe ience and p opensi y sco e ma ching me hod. We also e-e alua e
ou models using da a om bo h be o e and du ing he COVID-19 pandemic o accoun o po en ial
dis o ions caused by he c isis.
Table 4. impac o o eign-expe ienced Ceos on i m le e age.
Panel a: Panel B:
Va iable
BLe e age
BLe e age
MLe e age
MLe e age
(1) (2) (1) (2)
Fo eign Exp
_−2.28**
(−2.03)
−3.71***
(−3.30)
−5.99***
(-4.03)
−6.29***
(−4.41)
CEO Age
0.20***
(3.97)
0.12*
(1.83)
CEO Duali y
2.83***
(3.17)
4.43***
(3.81)
CEO Expe ience
−0.33***
(−5.35)
−0.31***
(−3.44)
CEO Gende
0.07
(0.06)
−0.25
(-0.18)
Capex
0.30***
(5.02)
−0.02
(−0.23)
Size
2.65***
(9.78)
2.38***
(6.64)
ROA
−0.77***
(−13.62)
−1.89***
(−23.59)
Sales G ow h
0.01
(1.20)
0.02*
(1.81)
Cons an
29.23***
(18.26)
−50.54***
(-6.20)
23.31***
(13.08)
−33.44***
(-3.15)
R
2
(%)
7.82 20.45 6.14 28.76
Obse a ions 2,292 1,863 2,292 1,863
Indus y FEs Yes Yes Yes Yes
Yea FEs Yes Yes Yes Yes
no e: -s a is ics a e in pa en heses. ***, **, and * indica e s a is ical signi icance a he 1%, 5%, and 10% le els.
