INNOVATION EFFICIENCY, OVERSEAS EXPERIENCE OF CHIEF EXECUTIVE OFFICER, AND FIRM VALUE IN CHINESE CHIP COMPANIES

Chen, Yung-Shuan

doi:10.1590/S0034-759020240303

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ARTICLES • Rev. adm. empres. 64 (3) • 2024 • https://doi.org/10.1590/S0034-759020240303 copy

INNOVATION EFFICIENCY, OVERSEAS EXPERIENCE OF CHIEF EXECUTIVE OFFICER, AND FIRM VALUE IN CHINESE CHIP COMPANIES

Eficiencia en innovación, experiencia internacional del director ejecutivo y valor de la empresa en compañías chinas de chips

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

This study examines the impact of CEO overseas experience and innovation efficiency on firm value. Using the propensity score matching technique with 645 observations from 129 Chinese chip companies listed from 2015 to 2019, we found that CEOs with overseas experience significantly increase firm value. Innovation efficiency has a significantly positive effect on firm value. Importantly, CEO overseas experience moderates the impact of innovation efficiency on firm value, indicating that these CEOs are better able to leverage innovation for value creation. The results underscore the importance of attracting and retaining CEOs with overseas experience and enhancing innovation efficiency to stay competitive. The study has theoretical and policy implications for companies, policymakers, and industry stakeholders.

Keywords:
CEO overseas experience; innovation efficiency; firm value; propensity score matching method; Chinese chip companies

Variable	Symbol	Definition	OE=1			OE=0
Variable	Symbol	Definition	Sample	Mean	SE	Sample	Mean	SE
Firm value	FV	Tobin’Q = market value/book value of total assets	155	3.38	2.81	490	2.38	2.05
Firm value_Sub	FV_sub	Market value + debt - cash	155	154.47	230.14	490	227.53	435.57
Innovation efficiency	IE	Intangible assets/total R&D expenditure	155	1.57	2.60	490	1.89	3.89
Innovation efficiency_Sub	IE_sub	R&d expenditure/operating income	155	2.39	5.00	490	6.01	16.37
Capital structure	Cap	Total debt/total assets (%)	155	34.79	17.02	490	38.87	20.22
Profitability	Pro	Net profit/operating income (%)	155	7.23	13.66	490	7.03	22.01
Firm size	Size	Ending total assets	155	70.99	131.19	490	169.28	403.60

Variable	Before the match (U) After the match (M)	Mean		Deviation rate	Deviation rate reduction ratio (%)	T-test
Variable	Before the match (U) After the match (M)	Treatment group	Control group	Deviation rate	Deviation rate reduction ratio (%)	t值	p>\|t\|
IE	U	1.57	1.89	-9.6		-0.96	0.34
IE	M	1.58	1.44	4.1	57.2	0.49	0.62
IE_sub	U	2.39	6.01	-29.9		-2.71	0.01
IE_sub	M	2.40	1.98	3.5	88.3	0.87	0.39
Cap	U	7.23	7.03	1.1		0.11	0.91
Cap	M	7.82	9.85	-11.1	-902.1	-1.23	0.22
Pro	U	34.79	38.87	-21.8		-2.27	0.02
Pro	M	34.86	34.91	-0.3	98.8	-0.02	0.98
Size	U	70.99	169.28	-32.8		-2.98	0.00
Size	M	71.40	73.09	-0.6	98.3	-0.12	0.91
Sample (Joint test)		Pseudo R2		LR chi2		p>chi2
Before the match (U)		0.02		16.81		0.01
After the match (M)		0.01		4.62		0.46

Variable	Tolerance	VIF	OE	IE	Cap	Pro	Size
OE	0.96	1.04
IE	0.97	1.04	-0.038
Cap	0.79	1.26	-0.089^* * p < 0.05;	-0.004
Pro	0.90	1.12	0.004	-0.172^* ***** p < 0.001; the matrix exhibits Pearson correlation coefficients.	-0.244^* ***** p < 0.001; the matrix exhibits Pearson correlation coefficients.
Size	0.84	1.19	-0.117^ p < 0.01;	-0.038	0.382^* ***** p < 0.001; the matrix exhibits Pearson correlation coefficients.	-0.15
FV	-	-	0.185^* ***** p < 0.001; the matrix exhibits Pearson correlation coefficients.	0.086^* * p < 0.05;	-0.489^* ***** p < 0.001; the matrix exhibits Pearson correlation coefficients.	0.107^* ***** p < 0.001; the matrix exhibits Pearson correlation coefficients.	-0.259^* ***** p < 0.001; the matrix exhibits Pearson correlation coefficients.

			The heterogeneity of the CEO
			OE_1	OE_2	OE_3
Model	(1)	(2)	(3)	(4)	(5)
Variable	ln(FV)	ln(FV)	ln(FV)	ln(FV)	ln(FV)
OE	0.229^* ***** p < 0.001; the values in parentheses are standard errors. (0.061)	0.140^* * p < 0.05; (0.070)
IE	0.015^* * p < 0.05; (0.007)	0.008 (0.008)	0.008 (0.008)	0.060^* ***** p < 0.001; the values in parentheses are standard errors. (0.019)	0.014^* * p < 0.05; (0.007)
IE^* * p < 0.05; OE		0.055^ p < 0.01; (0.022)
Cap	-0.022^* ***** p < 0.001; the values in parentheses are standard errors. (0.001)	-0.022^* ***** p < 0.001; the values in parentheses are standard errors. (0.001)	-0.021^* ***** p < 0.001; the values in parentheses are standard errors. (0.002)	-0.023^* ***** p < 0.001; the values in parentheses are standard errors. (0.003)	-0.022^* ***** p < 0.001; the values in parentheses are standard errors. (0.001)
Pro	0.002 (0.001)	0.002 (0.001)	0.001 (0.001)	0.004 (0.004)	0.002 (0.001)
Size	0.000^* ***** p < 0.001; the values in parentheses are standard errors. (0.000)	0.000^* ***** p < 0.001; the values in parentheses are standard errors. (0.000)	0.000^* ***** p < 0.001; the values in parentheses are standard errors. (0.000)	-0.001^ p < 0.01; (0.000)	0.000^* ***** p < 0.001; the values in parentheses are standard errors. (0.000)
Constant	1.429^* ***** p < 0.001; the values in parentheses are standard errors. (0.067)	1.444^* ***** p < 0.001; the values in parentheses are standard errors. (0.067)	1.407^* ***** p < 0.001; the values in parentheses are standard errors. (0.074)	1.685^* ***** p < 0.001; the values in parentheses are standard errors. (0.129)	1.502^* ***** p < 0.001; the values in parentheses are standard errors. (0.064)
R2	0.395	0.401	0.370	0.444	0.381
Observations	645	645	490	155	645

Model	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
Variable	ln(FV)	ln(FV)	ln(FV)	ln(FV)	FV_sub	FV_sub	FV_sub	FV_sub
OE	0.223^* ***** p < 0.001; the values in parentheses are standard errors. (0.061)				27.678^* * p < 0.05; (12.992)
IE_sub					3.102^* ***** p < 0.001; the values in parentheses are standard errors. (0.683)	2.159^ p < 0.01; (0.695)	32.771^* ***** p < 0.001; the values in parentheses are standard errors. (2.752)	3.080^* ***** p < 0.001; the values in parentheses are standard errors. (0.685)
Cap	-0.022^* ***** p < 0.001; the values in parentheses are standard errors. (0.001)	-0.021^* ***** p < 0.001; the values in parentheses are standard errors. (0.002)	-0.024^* ***** p < 0.001; the values in parentheses are standard errors. (0.003)	-0.022^* ***** p < 0.001; the values in parentheses are standard errors. (0.001)	-0.788^* * p < 0.05; (0.316)	-0.704^* * p < 0.05; (0.351)	-0.181 (0.555)	-0.821^ p < 0.01; (0.316)
Pro	0.001 (0.001)	0.001 (0.001)	0.004 (0.004)	0.001 (0.001)	0.756^ p < 0.01; (0.281)	0.558^* * p < 0.05; (0.297)	1.696^ p < 0.01; (0.597)	0.750^ p < 0.01; (0.282)
Size	0.000^* ***** p < 0.001; the values in parentheses are standard errors. (0.000)	0.000^* ***** p < 0.001; the values in parentheses are standard errors. (0.000)	-0.001^ p < 0.01; (0.000)	0.000^* ***** p < 0.001; the values in parentheses are standard errors. (0.000)	0.945^* ***** p < 0.001; the values in parentheses are standard errors. (0.028)	0.962^* ***** p < 0.001; the values in parentheses are standard errors. (0.029)	0.392^* ***** p < 0.001; the values in parentheses are standard errors. (0.114)	0.942^* ***** p < 0.001; the values in parentheses are standard errors. (0.028)
Constant	1.466^* ***** p < 0.001; the values in parentheses are standard errors. (0.064)	1.426^* ***** p < 0.001; the values in parentheses are standard errors. (0.071)	1.790^* ***** p < 0.001; the values in parentheses are standard errors. (0.128)	1.533^* ***** p < 0.001; the values in parentheses are standard errors. (0.062)	74.249^* ***** p < 0.001; the values in parentheses are standard errors. (13.687)	75.136^* ***** p < 0.001; the values in parentheses are standard errors. (14.841)	42.445^* * p < 0.05; (20.869)	82.654^* ***** p < 0.001; the values in parentheses are standard errors. (13.143)
R2	0.391	0.368	0.405	0.378	0.877	0.898	0.829	0.876
Observations	645	490	155	645	645	490	155	645

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