Abnormal Trading Halts,CEO Risk Preference And Corporate Risk-taking

Although modern economics assumes that the participants are rational.But in reality,this rational person almost does not exist.As the behavioral finance point out,the manager is not rational,and its behavior is often influenced by many irrational factors.In recent years,a large number of empirical studies of managers' personal characteristics have shown that managers' age,gender,education,tenure and experience have an impact on the production and operation decisions of enterprises.This paper aims to explore the effect of CEO risk preference on the company's management and investment decisions during the 2015 stock market turmoil,and further enrich the research on managers' personal characteristics.Using the upper echelons theory and behavior theory,based on the data of listed companies in A-share markets of Shanghai Stock Exchange and Shenzhen Stock Exchange from 2011 to 2015,from the individual characteristics of the angle of CEO,this study analyzes the relationship among abnormal trading halts,CEO risk preference and corporate risk-taking during the stock market turmoil in mid-2015 and the relationship among CEO risk preference,enterprise attributes and over investment.The results show that the abnormal trading halts decided by the CEOs during the stock market shock are a kind of risk behavior and consistent with the corporate risk-taking.During the downturn,the abnormal trading halts have protective effects on the market value of these companies.However,the abnormal trading halts make companies take higher risk.The high-risk behavior of these CEOs also makes the company take a higher financial leverage,invest more funds for inventions,take more M&A behavior and other risk characteristics.Compared with the non-abnormal trading halts CEO,the risk preference of the abnormal trading halts CEO causes more overinvestment of the company.Further considering the property of the enterprise ownership,it finds that the over investment behavior of the CEO of the non-state-owned enterprises is more obvious.This research has a reference for further understanding the relationship between CEO risk preference and corporate risk-taking.This study is helpful for further understanding the relationship between CEO risk behavior and corporate risk-taking.It has implications for China's over investment governance,and also provides a basis for supervising departments to strengthen trading halts management.