Research On CEO Tenure And Corporate Risk-taking

Corporate risk taking reflects the choice of investment projects in the investment.Higher risk-taking indicates that corporate managers are more adventurous and will not give up high-risk and high-profit investment projects.The level of risk-taking of enterprises has important significance for the long-term development.Especially after the outbreak of the financial crisis in 2008,the risk-taking problem of enterprises has attracted the attention of scholars,especially the role of managers based on the agency theory.The impact on corporate risk-taking.The core idea of modern enterprise theory is that the enterprise operator and the owner have the principal-agent problem because of the information asymmetry.In the case of the separation of ownership and management rights,the CEO and the shareholders are rational people,and the interests of the two are inconsistent.CEOs do not necessarily aim at the long-term interests of the company and the maximization of shareholder wealth when making investment decisions.Because of the important role of CEO in corporate governance and the realization of company value,the impact of managerial role on corporate risk exposure It has been increasingly concerned by academic research,such as the impact of managerial personal characteristics on corporate risk taking.This time,combined with previous research,the relationship between CEO tenure and corporate risk-taking will be studied.Based on the theory of high-level echelon,principal-agent theory and information asymmetry theory,the paper comprehensively discusses the relationship between CEO's tenure and corporate risk-taking.The basic research ideas are: firstly,the impact of the CEO's tenure and expected tenure on the risk-taking of the company.then,focusing on equity checks and balances,CEO holdings,and nature of property factors play a role in the CEO's tenure affecting corporate risk exposure.The research results show that there is an inverted U-shaped relationship between the CEO's tenure and the enterprise's risk-taking,that is,there is a critical point in the CEO's existing tenure to affect the enterprise's risk-taking.Before this critical point,with the extension of the existing term The CEO will gradually increase investment in high-risk projects,and the level of corporate risk-taking will increase.After this critical point,the CEO will begin to close or retire,which will reduce or even abandon investment in high-risk and high-profit projects,the level of risk-taking is reduced.The CEO expects that the tenure of office is positively related to the level of corporate risk-taking.When the CEO foresees that his future term is longer,he will increase investment in high-risk and high-yield projects,and the level of corporate risk-taking will increase.Further examining the role of institutional factors in the above relationship,the study found that in companies with low equity checks and balances,the tenure of CEO have a greater impact on corporate risk-taking than those with low equity checks.Compared with the CEO-holding companies,in the non-CEO-holding companies,both the tenure and the expected tenure of CEO have greater impact on the company's risk-taking;compared with the analyst's low attention enterprises,in the analyst's high attention enterprises,both the tenure and the expected tenure of CEO have greater impact on the company's risk-taking;compared with the low market competition enterprises,in the low market competition enterprises,both the tenure and the expected tenure of CEO have greater impact on the company's risk-taking.