Financial expert CEOs: CEO's work experience and firm's financial policies

Cláudia Custódio, Daniel Metzger

Research output: Contribution to journalArticlepeer-review

314 Scopus citations


We study CEOs with a career background in finance. Firms with financial expert CEOs hold less cash, more debt, and engage in more share repurchases. Financial expert CEOs are more financially sophisticated: they are less likely to use one companywide discount rate instead of a project-specific one, they manage financial policies more actively, and their firm investments are less sensitive to cash flows. Financial expert CEOs are able to raise external funds even when credit conditions are tight, and they were more responsive to the dividend and capital gains tax cuts in 2003. Analyzing CEO-firm matching based on financial experience, we find that financial expert CEOs tend to be hired by more mature firms. Our results are consistent with employment histories of CEOs being relevant for corporate policies. However, we cannot formally rule out that our findings are partly explained by endogenous CEO-firm matching.

Original languageEnglish (US)
Pages (from-to)125-154
Number of pages30
JournalJournal of Financial Economics
Issue number1
StatePublished - 2014


  • CEO employment history
  • CEO-firm matching
  • CEOs characteristics
  • Capital structure
  • Cash holdings
  • Financial expertise

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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