CEO Individual Characteristics And Corporate Risk-taking Behaviors

This paper aims to study the impact of executive personal characteristics on the corporate risk-taking behavior,focusing on two personal characteristics of executive such as CEO age and foreign experiences.Existing researches on corporate risk taking mainly focus on banks at the corporate level,but few scholars study non-financial enterprises,especially the characteristics of CEO and corporate risk-taking behavior at the individual level.Therefore,based on agency theory,upper echelon theory and career concern hypothesis,this paper attempts to establish a panel regression model based on executive characteristics using static panel regression and propensity score matching analysis methods,to empirically investigate the influence mechanism of CEO age and overseas experience on corporate behavior separately.In terms of CEO age,we believe that the influence of executive age on corporate risk-taking behavior is non-linear which is different from existing research.That is,the risk behavior of CEO associated with age is constrained by a series of internal mechanisms resulting the heterogeneous impact of age on the company's risk-taking,such as cognitive ability,career concern,signal theory,and social capital.On these views,this paper introduces the nonlinear function of age and establishes the panel data regression model to explain the age effect.The empirical result shows that CEO's age has a significant hump-shaped impact on the company's risktaking.After changing the proxy of corporate risk-taking,the conclusion is still valid.In terms of foreign experiences of CEO,due to the different risk attitude,management ability,social network and career concern,it makes CEO with foreign experiences have a significant positive impact on corporate risk-taking.And the positive impact of foreign studying experience is even greater.After concerning about endogeneity,the conclusion is still valid.Because the individual effects of CEO are affected by corporate governance environment,we discuss above findings according to CEO duality,equity incentive status of company and the proportion of institutional investors holding shares to examine the moderate effects of corporate governance.We find that:(1)When the CEO serves as chairman,the reversed U-shaped relationship between CEO age and corporate risk-taking is significant,and the foreign experiences of CEO has a significant positive impact on the corporate risk-taking;otherwise,it does not exist.(2)In companies that accept equity incentives,the inverted U-shaped effect of CEO age does not exist.(3)the foreign experiences of the executives of the companies with the highest shareholding ratio of institutional investors has a more significant positive effect.The research conclusion has important reference value for understanding CEO age effect,foreign experience effect and governance mechanism of corporate risk-taking.