CEOs’ background and shadow banking of non-financial enterprises

Abstract To explore the impact of CEOs’ backgrounds on the financialization of non-financial enterprises, this paper takes China’s A-share non-financial listed companies from 2007 to 2023 as the research sample, focuses on the dual political and financial backgrounds of CEOs, and conducts an empirical study by combining heterogeneity analysis and mechanism tests. The results show that: CEOs’ political backgrounds significantly reduce the scale of enterprises’ shadow banking businesses, with a particularly pronounced effect on bank-oriented shadow banking activities; by contrast, CEOs’ financial backgrounds significantly boost the expansion of both categories of shadow banking businesses. The heterogeneity analysis reveals that the restraining effect of political backgrounds is more prominent for female CEOs, while their banking backgrounds exert an opposite inhibitory impact. Moreover, state-owned enterprise (SOE) ownership amplifies the restrictive role of CEOs’ political backgrounds and weakens the promotional effect of their financial backgrounds. The mechanism tests demonstrate that political connections inhibit irregular arbitrage behaviors through “reputation constraints” and “dual supervision”, whereas financial backgrounds drive the shift of capital from the real economy to the virtual economy by virtue of professional cognition and risk preferences. This study provides a differentiated perspective for preventing enterprises from “shifting from the real to the virtual economy” and optimizing senior management governance. JEL : C5; G3; G4