Boom‐Baby CEOs, Career Experience, and Risk Taking: A Natural Experiment Using Chinese CEOs’ Growth Paths

Abstract

China's economy represents a unique experimental environment, in that it has undergone a successful transformation from a planned to a more open system. Leveraging this natural experimental setting, this study examines the impacts of CEOs’ formative experiences on their risk‐taking behavior. Two events likely constitute formative experiences for CEOs: economic reforms that commenced in 1978 and their prior career experiences. In turn, CEOs’ risk tolerance attitudes likely reflect the influences of these significant events. The results show that CEOs who experienced economic reforms in their early adult life exhibit higher risk‐taking likelihood and greater risk tolerance than those who grew up during the planned economy era. Furthermore, firm performance achieved by CEOs’ risk taking is significantly better when CEOs originally started working in and then remained within business sectors.

How to detect and forecast corporate fraud by media reports? An approach using machine learning and qualitative comparative analysis

“…Previous studies have found that the gender characteristics, marriage views, party membership, and other personal violations of senior executives can reflect their personal conduct and determine whether they can honestly report the company's financial information. The marital status and family background of senior executives reflect their risk attitudes and altruistic tendencies and influence the company's decision making through upper echelons theory (Hao et al, 2019). Hilary et al (2017) found that CEOs or chief financial officers who were unfaithful to marriage were more likely to violate the rules.…”