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Abstract

News — This study examines whether managers with investment bank experience (IB managers) exhibit myopic behaviour. We focus on the top managers of nonfinancial firms in China to examine whether IB managers sacrifice real investments by allocating more resources to short-term investments. We find that firms with IB managers tend to have fewer long-term investments and more financial-asset investments that yield high levels of short-term returns than firms without IB managers. Consequently, firms with IB managers suffer from poor long-term performance and exert a negative externality on environmental performance. We further document that this effect is stronger when IB managers hold powerful positions or when they have intensive investment bank experience. Further, this effect is weakened when firms have powerful shareholders. Overall, our study identifies how variations in managers’ work experiences are reflected in managerial myopia and documents the factors that negatively affect the long-term performance and environmental awareness of firms.