Year of Graduation
The Influence of CEO's Personal Traits on Corporate Risk-taking
The investigation contributes to the analysis of the effect of CEO’s personal traits (such as age, tenure, gender, duality, overconfidence and cultural background) on corporate risk-taking that is measured via three metrics: corporate structure bias form the industrial average, R&D expenses bias form the industrial average and liquidity ratio bias from the industrial average. We analyze biases form the industrial mean rather than actual values due to the fact that it does help to control for the industrial specific features. The sample of the research includes European companies from such countries as Germany, France, UK, Switzerland, Spain and the Netherlands. We analyze years 2008-2013 to cover the crisis and recovery. Using PLS-SEM model and creating a latent variable CEO risk attitude that contains the personal characteristic of a CEO, negative influence of the endogenous latent variable that tends to represent CEO risk aversion on capital structure and R&D biases from the industry average was found. The impact of CEO risk aversion on liquidity bias from industry mean appeared to be insignificant. Obtained results confirm the phenomenon of CEO’s personal characteristics influence on corporate risk and provide ideas for further research in the current field of investigations.