CEO's Total Wealth Characteristics and Implications on Firm Risk

Timo Korkeamäki*, Eva Liljeblom, Daniel Pasternack

*Tämän työn vastaava kirjoittaja

Tutkimustuotos: LehtiartikkeliArticleScientificvertaisarvioitu

1 Sitaatiot (Scopus)

Abstrakti

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.

AlkuperäiskieliEnglanti
Sivut35-58
Sivumäärä24
JulkaisuINTERNATIONAL REVIEW OF FINANCE
Vuosikerta18
Numero1
DOI - pysyväislinkit
TilaJulkaistu - 1 maaliskuuta 2018
OKM-julkaisutyyppiA1 Julkaistu artikkeli, soviteltu

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