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The curvilinear effect of top management team task-related demographic faultlines on over-investment

Qing Xie (School of Business, Zhengzhou University of Aeronautics, Zhengzhou, China)
Wuwei Li (School of Business, Zhengzhou University of Aeronautics, Zhengzhou, China)
Yuanyuan Zhang (School of Economics and Management, Xi'an University of Technology, Xi'an, China)

Management Decision

ISSN: 0025-1747

Article publication date: 25 May 2021

Issue publication date: 6 January 2022

742

Abstract

Purpose

This study empirically examines the curvilinear relationship between top management team task-related demographic faultlines and over-investment, as well as how biodemographic faultlines and industrial environment moderate the curvilinear relationship between task-related demographic faultlines and over-investment.

Design/methodology/approach

The study designs the panel data from the listed companies of China's growth enterprises board (GEB) (set up by Shenzhen Stock Exchange in 2009) in the period 2011–2016 and uses hierarchical regression analysis and grouping regression analysis in exploring the curvilinear relationship with the variables involved.

Findings

The study provides empirical insights into the relationship on top management team (TMT) task-related demographic faultlines and over-investment, as well as how biodemographic faultlines and industrial environment moderate the relationship between task-related demographic faultlines and over-investment. It suggests that the relationship between task-related demographic faultlines and over-investment is significantly inverted-U. Furthermore, biodemographic faultlines and industrial environment can strengthen the inverted-U relationship between TMT task-related demographic faultlines and over-investment.

Research limitations/implications

The study investigates the influence of task-related demographic faultlines on firm over-investment. The sample is restricted to the listed companies on GEM in China and limited in size. It is also not concerned with the cross-culture contrastive analysis between the Chinese- and Western-listed companies.

Practical implications

The findings suggest that strong/weak TMT task-related demographic faultlines is beneficial in promoting rational investment, but medium TMT task-related demographic faultlines may lead to over-investment.

Originality/value

The study within the crossed-categorization theory, the study provides a contemporary research path by moderating biodemographic faultlines and industrial environments to explain the long-ignored impact of TMT faultlines within a new perspective of firm investment efficiency with a recent significant sample of new emerging countries (e.g. China).

Keywords

Acknowledgements

The authors are profoundly grateful to the editors and anonymous reviewers for their valuable comments and helpful suggestions. The authors also gratefully acknowledge National Social Science Foundation of China under grant 17BGL041.

Citation

Xie, Q., Li, W. and Zhang, Y. (2022), "The curvilinear effect of top management team task-related demographic faultlines on over-investment", Management Decision, Vol. 60 No. 1, pp. 27-47. https://doi.org/10.1108/MD-03-2020-0287

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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