How Does <scp>CEO</scp> Age Affect Firm Risk?

Chowdhury, Jaideep; Fink, Jason

doi:10.1111/ajfs.12174

Cited by 30 publications

(19 citation statements)

References 55 publications

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“…The second instrumental variable is the current age of the CEO. Prior research has shown that older CEOs are more risk averse and are less likely to invest in R&D (Chowdhury & Fink, ; Kalyta, ), which is critical to support a prospector strategy. Our use of this instrument stems from the likely role of the firm's top decision makers, who serve as the primary link between the organization and its environment, in setting business strategy (Miles & Snow, ).…”

Section: Empiricial Resultsmentioning

confidence: 99%

Tax avoidance, financial experts on the audit committee, and business strategy

Hsu

Moore

Neubaum

2018

Business Fin & Account

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We examine whether financial expert audit committee members tailor their approach to overseeing the corporate tax planning process according to the firm's business strategy. We predict and find that such directors encourage defender‐type firms (characterized partially by high risk aversion) to engage in more tax avoidance activities and prospector‐type firms (characterized partially by innovation and risk seeking) to scale back on tax avoidance, relative to the opposing strategy type. We also find that both accounting experts and non‐accounting financial experts on the audit committee contribute to our results to some extent, although the effects of non‐accounting financial experts present more consistently. Overall, our results suggest that financial experts on the audit committee tend to play more of an advising role for defenders and more of a monitoring role for prospectors, relative to one another.

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Section: Empiricial Resultsmentioning

confidence: 99%

Tax avoidance, financial experts on the audit committee, and business strategy

Hsu

Moore

Neubaum

2018

Business Fin & Account

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“…Literature shows inconclusive results about the age and corporate performance relationship. For instance, some studies documented that younger CEOs invest more in R&D (Barker and Mueller, 2002; Chowdhury and Fink, 2017; Gan, 2019) and have more volatile earnings than older ones (Zhou and Wang, 2014). This means that firms with younger CEOs are relatively more exposed to risk and are susceptible to investment inefficiency.…”

Section: Literature and Hypothesis Developmentmentioning

confidence: 99%

Board diversity and investment efficiency: evidence from China

Ullah

Zeb

Khan

et al. 2020

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Purpose The purpose of this study is to investigate the relationship between board diversity measured as relation-oriented, task-oriented and board overall diversity and firm’s investment efficiency. Design/methodology/approach This study estimates four dimensions of board diversity, including age, gender, tenure and education. The four dimensions are further categorized in relation-oriented diversity (i.e. age and gender), task-oriented diversity (i.e. tenure and education) and overall board diversity (relation and task oriented). Panel data analysis is used to examine the board diversity–investment efficiency relationship in Chinese listed firms during the years 2003–2018. The findings of the study are robust to a battery of econometric techniques. Findings This study finds relation-oriented, task-oriented and overall diversity of a board curb investment inefficiency by discouraging sub-optimal investment (over- or under-investment). In other words, board diversity improves firms’ investment efficiency. Practical implications The results suggest that board diversity plays a significant role in corporate decisions. The findings illustrate that board diversity disciplines the management, reduces agency conflicts and thereby improves corporate governance, resulting in higher investment efficiency. Originality/value This study has two important contributions. First, this study extends the prior literature of investment efficiency by considering socio-psychological dimension of the board diversity by constructing relation- and task-oriented diversity. Second, contrary to earlier studies on board diversity, this study takes four facets of board diversity, i.e. age, gender, education and tenure that improve corporate governance mechanism.

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“…As growing old, top executives, including CEOs, are inclined to become more conservative, reputation-concerned and risk-averse (Chowdhury & Fink, 2017;Maccrimmon & Wehrung, 1990). CEOs' preference for the quiet life increases with age, which means that older CEOs would be unwilling to initiate risky move or intentionally defend against potential risks.…”

Section: The Moderating Effect Of Ceo's Agementioning

confidence: 99%

Impression management against early dismissal? CEO succession and corporate social responsibility

Liu

2019

Corp Soc Responsibility Env

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This study builds on insights from both upper echelons theory and agency perspective to examine the effect on corporate social responsibility (CSR) performance of CEO succession. Drawing on prior literature on impression management and analyzing the CEO selection process, we argue that CEO successors are motivated to improve CSR performance as a tactic of impression management in the CEO succession context in the hope of securing their leadership against the early dismissal. Additionally, we explore the moderating effect of CEO characteristics, specifically age and origin, on the relationship between CEO succession and CSR. Based on a sample of 3360 firm‐year data in 736 Chinese listed companies from the period of 2008–2016, we find that CEO succession has a positive effect on post‐succession CSR and CEO age enhances the effect while CEO outside origin weakens this effect.

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How Does CEO Age Affect Firm Risk?

Cited by 30 publications

References 55 publications

Tax avoidance, financial experts on the audit committee, and business strategy

Tax avoidance, financial experts on the audit committee, and business strategy

Board diversity and investment efficiency: evidence from China

Impression management against early dismissal? CEO succession and corporate social responsibility

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