This　study　investigates　how　CEO　behavior　and　incentives　change　during　the　CEO＇s　final　years　in　office,　known　as　the　horizon　problem.　We　examine　how　the　horizon　problem　alters　managerial　slack,　a　measure　of　operational　inefficiency　and　managerial　value　diversion.　Using　data　on　Chinese　publicly　traded　firms　between　2003　and　2011,　we　find　that　managerial　slack　increases　in　the　last　two　years　of　CEO　tenure　compared　to　earlier　years.　We　also　show　that　the　increase　in　managerial　slack　in　CEO　final　years　in　office　is　smaller　in　privately　controlled　firms　than　in　state-owned　enterprises,　smaller　in　firms　with　CEO　equity　ownership　and　more　independent　boards　compared　to　those　without.　We　conclude　that　higher　quality　corporate　governance　mechanisms　ameliorate　the　perverse　incentives　associated　with　the　CEO　horizon　problem,　and　reduce　CEOs＇　tendency　to　increase　managerial　slack　during　their　final　years　in　office.　©　The　International　Association　for　Chinese　Management　Research　2018.