Do firms led by founders take higher risk?-Reference-Cited by-同舟云学术

Do firms led by founders take higher risk?

Published:2024-03-24 Issue:3 Volume:59 Page:687-717
ISSN:0732-8516
Container-title:Financial Review
language:en
Short-container-title:The Financial Review

Author:

Lawrence Edward¹,Nishikawa Yuka²,Upadhyay Arun¹

Affiliation:

1. Department of Finance, College of Business Florida International University Miami Florida USA

2. Department of Finance, Real Estate, and Law, College of Business Administration California State Polytechnic University, Pomon Pomona California USA

Abstract

AbstractThis study examines whether firms led by founder‐CEOs are significantly different from firms led by nonfounder‐CEOs in terms of the nature of their risk. Our results show that founder‐led firms are associated with higher operational but lower financial risk. We find that the differential nature of risk‐taking in founder‐CEO firms is driven by CEO's influence, their propensity of removal, and the probability of bankruptcy of the firm. While CEO‐chair duality and the sensitivity of founder‐CEO firm's probable bankruptcy play significant roles in determining the level of financial risk, the sensitivity of founder‐CEOs to forced turnover leads to higher operational risk.

Publisher

Wiley

Link

https://onlinelibrary.wiley.com/doi/pdf/10.1111/fire.12388

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