Do CEO's attributes increase risk-taking? Empirical evidence from France

Abstract

PurposeThe current paper studies how CEO attributes could influence corporate risk-taking. The authors examine the effects of CEO demographic attributes and CEO position's attributes on financial and strategic risk-taking.Design/methodology/approachThis study is drawn on non-financial firms listed on the SBF120 index, between 2001 and 2013.FindingsFirst, long-tenured CEOs are prone to decrease the total risk and the leverage ratio. Second, despite the many CEOs have political connections; they are not prone to engage in risky decisions not serving the business' interests. Third, old CEOs are likely to rely on debt to fund internal growth. Moreover, business and science-educated CEOs behave differently in terms of risk-taking. Finally, the authors show that CEOs' attributes have less influential effects in family firms than in non-family firms. Also, they seem to have more significant associations with risk-taking during and after the financial subprime crisis.Originality/valueThis paper examines how cognitive traits could shape investments decisions, in terms of risk preferences.