CEO CHARACTERISTICS, FIRM POLICY, AND FIRM PERFORMANCE

This research aims to investigate the effect of CEO characteristics (female gender, education, and age) on the financing policy (interest-bearing debt to total assets), investing policy (capital expenditure), and firm performance (return on assets) when it is controlled by firm size and firm age. Our research uses the data of the manufacturing companies listed on the Indonesia Stock Exchange (IDX) in the period 2010 - 2017. The results of our research show that female CEOs have a significant negative effect on financing policy. This has a significant positive effect on firm performance, but no significant effect on investing policy. We also found that CEO education negatively and significantly affects financing policy, but positively and significantly affects investing policy and performance. Meanwhile, CEO age has a significant negative influence on financing policy but no significant influence on investing policy and performance. Our research results support behavioral finance theory by providing empirical evidence that CEO behavioral aspects are correlated with the female gender, education, and age in terms of significantly affecting firm policies and performance. The implication of this research is that investors should know the CEO characteristics of the companies in which they invest their money because the CEO characteristics can be used as references to predict performance and CEO policy decision-making. higher said taxes. The results of this study also show that behavioral finance theory is still results show that female CEOs positively and significantly affect firm performance in the form of the return on assets. These results are consistent with the hypothesis of our research, and the research results of Amore et al. (2014) and Lam et al. (2013). However, they do not support the research results of Oldford et al. (2021). The results prove that even though companies led by female CEOs tend to be risk-averse, they can still efficiently manage the company assets and generate a 2.9% higher return on assets than companies led by male CEOs. The return on assets increases because female CEOs can increase their sales and reduce the costs of the company. costs and losses company profits. This study shows that behavioral finance theory is still relevant. This result shows that there is an error in the information process and bias by male CEOs which is shown by them taking higher risks but producing a lower return. These results are like those produced by Barber and Odean's (2001) research that men tend to overestimate and actively trade but underperform. results of this study regarding the influence of the behavior of CEOs with a business master’s education on investment policy (capital expenditure) is relevant and in accordance with behavioral finance theory, but not the results of our study about the influence of gender including female CEOs and CEO age. The results on the effect of a female CEO on firm performance in our research is consistent with behavioral finance theory, social role theory, and the results of the research by Barber and Odean (2001). The results of this study on the influence of the behavior of CEOs with the education of a business masters on company performance (return on assets) supports behavioral finance theory. The results of the work of Barber and Odean (2001) indicate that there is no overconfidence in CEOs with a business master’s education such as an MM or MBA. This is where the CEOs with an MM or MBA can produce a higher return on assets than companies led by CEOs without an MM or MBA business master’s education.