Are optimistic CEOs and pessimistic CFOs the best partners? Evidence from corporate cash holdings

Based on the perspective of corporate cash holdings, this paper explores whether the combination of an optimistic CEO and a pessimistic CFO creates the “best partners”. Taking the non-financial A-share listed firms in China from 2010 to 2018 as the sample, ordinary least squares (OLS) regression analysis was used as the baseline approach to empirically test, for the first time, the comprehensive influence of CEO optimism and CFO pessimism on corporate cash holdings. The empirical results show that firms with an optimistic CEO and a pessimistic CFO will hold less cash. Moreover, this negative compound effect is found to be more significant in regions with a strong gambling culture and in non-state-owned enterprises (non-SOEs). Further analysis reveals that whether the CFO sits on the board of directors and the educational level difference between the CEO and CFO are also essential factors restricting this negative compound effect. This study provides a new perspective for relevant research on upper echelons theory, and also enriches relevant research on the factors influencing corporate cash holdings.