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CEO’s total wealth ...
CEO’s total wealth characteristics and implications on firm risk
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- Korkeamäki, Timo (författare)
- Hanken School of Economics
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- Liljeblom, Eva (författare)
- Lund University,Lunds universitet,Nationalekonomiska institutionen,Ekonomihögskolan,Department of Economics,Lund University School of Economics and Management, LUSEM,Hanken School of Economics
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- Pasternack, Daniel (författare)
- Hanken School of Economics,Elite Asset Management Plc
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(creator_code:org_t)
- 2017-06-28
- 2018
- Engelska.
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Ingår i: International Review of Finance. - : Wiley. - 1468-2443 .- 1369-412X. ; 18:1, s. 35-58
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Abstract
Ämnesord
Stäng
- We study the connections between firm risk and the CEO’s personal wealth characteristics, using a unique dataset on CEO wealth and its components. Consistent with decreasing absolute risk aversion, we find that wealthier CEOs are associated with higher risk firms. Riskier firms tend to have CEOs whose wealth is more independent of the firm. We also find that CEOs with high personal portfolio betas run firms with higher betas. CEO’s tenure is negatively associated with firm risk measured either as beta, idiosynchratic risk, or volatility of accounting profitability. A possible interpretation is that risk-averse managers are better able to imprint their risk preferences on the firm over time. Stronger corporate governance weakens the connection between CEO wealth characteristics and firm risk.
- We study the connections between firm risk and the CEO’s personal wealth characteristics, using a unique dataset on CEO wealth and its components. Consistent with decreasing absolute risk aversion, we find that wealthier CEOs are associated with higher risk firms. Riskier firms tend to have CEOs whose wealth is more independent of the firm. We also find that CEOs with high personal portfolio betas run firms with higher betas. CEO’s tenure is negatively associated with firm risk measured either as beta, idiosynchratic risk, or volatility of accounting profitability. A possible interpretation is that risk-averse managers are better able to imprint their risk preferences on the firm over time. Stronger corporate governance weakens the connection between CEO wealth characteristics and firm risk.
Ämnesord
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Business Administration (hsv//eng)
Nyckelord
- Ceo wealth
- Firm risk
- CEO wealth
- firm risk
Publikations- och innehållstyp
- art (ämneskategori)
- ref (ämneskategori)
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