This study investigates the impact of military-experienced board members on firm-level investment efficiency, focusing on Indonesian non-financial listed companies from 2011 to 2019. It integrates upper echelons and imprinting theories to explain how military backgrounds shape corporate decision-making, particularly in relation to risk preferences.
Based on 2,648 firm-year observations, this study employs fixed-effects regression to analyze the relationship between military experience and investment efficiency. To address endogeneity and ensure robustness, we apply Heckman's two-stage regression, coarsened exact matching (CEM), propensity score matching (PSM) and the generalized method of moments (GMM).
The results reveal a significantly positive association between military-experienced boards and investment efficiency. This effect is particularly pronounced in underinvesting firms, in firms operating in low-concentration industries, and where board commissioners have military backgrounds. The positive association is also evident in the context of R&D efficiency.
These findings suggest that appointing board commissioners with military backgrounds can enhance disciplined and context-sensitive investment decisions. However, military discipline alone may not substitute for financial expertise, underscoring the need for a balanced board composition.
