Chair–CEO age dissimilarity and investment efficiency: evidence from China

Purpose This research aims to investigate the influence of age dissimilarity between the chairman (Chair) and the chief executive officer (CEO) on firm investment efficiency (IE). This paper posits that differences in age between these key leadership positions lead to divergent perspectives, values and priorities. Moreover, such an age gap may create communication barriers, hindering effective communication and the exchange of investment-related ideas. Design/methodology/approach This study used regression techniques on a dataset comprising 22,792 firm-year observations from 2001 to 2022. Additionally, this paper conducted the Heckman two-stage least squares test and propensity score matching to examine the developed hypothesis rigorously. Findings Drawing on data from 2001 to 2022 from companies listed on the Chinese Stock Exchange, the analysis indicates a negative association between age dissimilarity among Chair–CEO pairs and firm IE. Further cross-sectional analyses highlight the pronounced nature of this relationship within firms characterized by competitive market environments, dispersed ownership structures and non-state-owned enterprise status. The findings hold robustly across alternative measures of age dissimilarity and IE. Originality/value This research explored how age dissimilarity between the CEO and Chair affects firm IE. By investigating this previously unexamined area, this paper uncovers the underlying mechanisms through which generational differences in leadership can influence strategic decision-making and resource allocation. This study fills a significant gap in the corporate governance literature and provides valuable insights for practitioners and policymakers seeking to enhance firm performance through optimal leadership dynamics.