At this stage, the reform of state-owned enterprises (SOEs) is in full swing, and how to optimize the governance of parent-subsidiary companies to promote the overall advantages of the SOE Group is not only the strategic focus of the central government to comprehensively deepen the reform and innovation but also a hot topic in the academic interest. However, whether from the perspective of “unidirectional governance” or “bidirectional governance”, existing research on the effectiveness of parent-subsidiary governance of enterprise groups is still controversial. A review of existing literature reveals that research on the governance of parent-subsidiary companies of enterprise groups has paid particularly little attention to the economic consequences of changes in senior executives. At the same time, China's economy faces the risk of a shift from reality to virtual induced by the increased financialization of firms, and therefore, SOEs are increasingly focusing on returning to their main business. The financialization behavior of central enterprise group holding companies is not only affected by the motivation of subsidiaries to financialize but also by the influence of the effectiveness of the governance of parent-subsidiary companies. Unfortunately, few studies have explored the factors driving the financialization behavior of firms from the perspective of the governance of parent-subsidiary companies.
   Considering that job appointment and removal is an important institutional arrangement to incentivize and restrain the senior executives of central enterprise groups and subsidiaries in order to realize the governance of the group's parent-subsidiary companies, this paper makes use of this special external supervisory mechanism to investigate the impact of the senior executive change of central enterprise groups on the financialization behavior of holding companies by using the OLS regression model with the listed companies held by the central enterprise groups as the research object. Based on the personnel appointment and removal announcements disclosed by the State-owned Assets Supervision and Administration Commission of the State Council, this paper manually collates the database of appointments and removals of the senior executives of central enterprise groups between 2009 and 2019. The empirical study in this paper shows that the change of the senior executives in the central enterprise group significantly reduces the degree of financialization of the holding companies, and a series of robustness tests, such as the DID model, the Heckman two-stage regression, the PSM-OLS model, the placebo test, the identification of reverse causality, the sub-sample analysis, the variable substitution, and the control of omitted variables, support the results of the benchmark regression. The mechanism test shows that the change of senior executives of SOE groups is mainly to reduce the holding company's financial assets by reducing agency conflicts and improving the performance of the main business. Further research shows that the governance effect of senior executive change is more obvious on the optimization of financial asset investment behavior of holding companies in non-core central enterprise groups when the type of senior executive change is promotion and the number of changes is less. It is found that the change of senior executives in central enterprise groups can not only improve the main business performance of holding companies but also effectively restrain the crowding out effect of financialization on the R&D activities of holding companies and enhance holding companies' innovation ability.
   This paper takes the appointment and removal of positions in the parent company as an entry point to study the impact of senior executive change of central enterprise groups on the financialization behavior of the holding companies, which not only enriches research on the economic consequences of the governance of parent-subsidiary companies of enterprise groups and related literature on the factors influencing the financialization of the real enterprises but also provides a new perspective to test the operational efficiency of the central enterprise groups. Further, the findings of this paper can provide important policy insights for deepening the governance reform of central enterprise groups and promoting central enterprise groups to focus on their main responsibilities and businesses.