The Influence Of Chairman’s Famine Experience On The Enterprise’s Risk-taking

In the field of corporate finance,risk-taking has always been a hot topic that scholars pay close attention to.Generally speaking,the risk preference of enterprise managers in investment decisions will be reflected in the level of enterprise risk-taking.The higher the level of risk-taking,the more inclined the managers are to choose investment projects with higher expected rate of return.This kind of investment in risk activities plays a very important role in promoting enterprise management and even social development.From a macro point of view,a higher level of risk-taking in the market can accelerate the speed of science and technology updating and iteration,promote the accumulation of capital in the whole society,and provide a constant power for economic growth.From a micro point of view,higher risk-taking means more R&D expenditure and investment in new projects,which not only creates jobs and increases tax revenue,but also improves business performance and core competitiveness of enterprises.In China,compared with other managers of enterprises,the chairman plays a crucial role in the corporate governance structure,usually has higher authority and prestige,and his behavior and speech often have greater discourse power and guiding power.Therefore,the behavior and decision of the chairman have a decisive influence on the future development and strategic direction of the company.The heterogeneity of the early experience of the chairman may have shaped the special character and behavior pattern of the chairman,which leads to the different corporate culture and management style of the company he works for.Based on this,this paper takes the 1959-1961 famine that almost spread throughout China as A "natural experiment",and uses China’s A-share listed companies from 2000 to 2020 as research samples,obtains the birthplace or native place information of 2848 chairmen by hand.The scale of births in the 1990 census data was used to calculate the severity of famine in each prefecturelevel city in order to study the difference in the level of risk-taking caused by famine in different regions.In this paper,it is assumed that the birthplace or native place of the chairman is the same as the place where the chairman experienced famine,so the intensity of the famine experienced by the chairman is equal to the intensity of the famine in his birthplace or native place.Finally,16,209 annual and firm observed values are obtained after screening,and regression analysis is carried out using the Cohort DID model,aiming at answering the following questions:First,how does famine affect the level of risk-taking?Second,what is the mechanism by which the famine chairman affects the level of enterprise risk-taking?The theoretical and practical significance of this paper is as follows:firstly,this study deepens the understanding of the long-term effects of the traumatic event of the Great Famine on individuals.Secondly,this study deepens the understanding of interdisciplinary theories such as Psychoanalytic Theory,Upper Echelons Theory,Imprinting Theory.Thirdly,this article has certain guiding significance for enterprises to hire talents.Fourthly,the research results of this paper provide a reference for investors to make reasonable investment decisions to some extent.The empirical test of this paper shows that:firstly,the higher the severity of famine experienced by the chairman,the lower the level of risk-taking of the company he works for.Secondly,the experience of the Great famine affects the level of risk-taking of enterprises through the path of improving the risk aversion level of the chairman.Thirdly,when the equity is relatively concentrated,the chairman has a greater decisionmaking autonomy,which will strengthen the negative influence of famine experience on the level of enterprise risk-taking.Fourthly,compared with private enterprises,the directors of state-owned enterprises have less incentive to take more aggressive investment decisions,thus reducing the level of risk-taking of the enterprises.Fifth,when the proportion of independent directors in an enterprise is low,the supervision of the chairman is weaker,which makes the enterprise’s risk-taking level lower.The innovation points of this paper are as follows:Firstly,this paper finds that famine reduce the level of corporate risk-taking by changing the chairman’s risk preference mechanism,expanding the research scope of corporate governance,behavioral finance,and psychology.Secondly,this paper explores the causal relationship between the intensity of famine and the level of corporate risk-taking from a new perspective of the chairman’s experience of the famine.This not only enriches the research content on the long-term impact of the Chinese famine on individuals,but also broadens the research scope of factors influencing risk-taking levels.