CEO's Total Wealth Characteristics and Implications on Firm Risk

Korkeamäki, Timo; Liljeblom, Eva; Pasternack, Daniel

doi:10.1111/irfi.12139

Cited by 7 publications

(3 citation statements)

References 59 publications

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“…Corporate governance also impacts the relationship between CEO wealth characteristics and corporate risk. Korkeamaki, Liljeblom, and Pasternack () find that wealthier CEOs and CEOs whose personal wealth is independent of their firms tend to take more risk, but stronger corporate governance weakens this connection. Ferreira and Laux () report that firms with fewer takeover provisions (strong corporate governance) display higher levels of idiosyncratic risk.…”

Section: Theoretical Framework and Related Literaturementioning

confidence: 99%

CEO power and corporate risk: The impact of market competition and corporate governance

Sheikh

2019

Corporate Governance

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Research Question/Issue Although there is no unified theory that can explain the relationship between CEO power and corporate risk, the empirical evidence generally finds a positive association. This study argues that market competition and corporate governance play critical roles in influencing this relationship. Research Findings/Insights Using a large panel of nonfinancial U.S. corporations for the period 1992–2015, I find that CEO power is positively associated with total and idiosyncratic measures of risk. However, this positive association remains significant only when market competition is high or corporate governance is strong. Theoretical/Academic Implications The research design of this study combines the predictions of agency theory, the behavioral agency model, and prospect theory to further our understanding of the relationship between CEO power and corporate risk, including consideration of how competition and corporate governance influence this relationship. Practitioner/Policy Implications The empirical evidence presented in this study can help boards to more accurately gauge when CEO power is most beneficial in terms of optimal levels of corporate risk and to better understand the relationship between power and risk. The results suggest that boards should grant more power to their CEOs when their firms operate in high‐competition markets or have strong corporate governance in place.

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Section: Theoretical Framework and Related Literaturementioning

confidence: 99%

CEO power and corporate risk: The impact of market competition and corporate governance

Sheikh

2019

Corporate Governance

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“…Imprinting theory suggests that organizations or individuals go through a number of "sensitive periods" (Pieper et al, 2015) during their development, during which they focus on exhibiting a high degree of sensitivity to the external environment, allowing organizations or individuals to potentially develop imprinting characteristics with a particular environment. For individuals, what imprinting theory refers to as "sensitive periods" are not only the "early" experiences of individuals, but also periods that have shaped their worldview, values and outlook on life, or periods of individual role transitions, for example, the famine in China (Long et al, 2020), SARS experiences during childhood (Yao et al, 2021), Total Wealth Characteristics (Korkeamäki et al, 2018), social class (Kish-Gephart and Campbell, 2015), work experience (Terbeck et al, 2021), etc. can be referred to as sensitive periods (Kish-Gephart and Campbell, 2015;Mathias et al, 2015).…”

Section: Theoretical Background and Hypothesis Imprinting Theorymentioning

confidence: 99%

Sadder but Wiser: The Role of SARS Imprinting and Firms’ Recovery During the COVID-19 Pandemic

Yao

Wang

et al. 2022

Front. Psychol.

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Our study provides a new research perspective on firms’ recovery during the COVID-19 pandemic, i.e., can similar events experienced by firms in the past have an imprinting effect on the improvement of firm’s recovery? We focus on firms’ Severe Acute Respiratory Syndromes (SARS) imprints. Based on four quarters of panel data of Chinese A-share listed companies in 2020, our study finds that SARS imprints are positively related to firms’ recovery ability during the COVID-19 pandemic. Meanwhile, if the more severe the SARS pandemic experienced by a firm, the more significant the effect of SARS imprint on the firm’s recovery ability during the COVID-19 pandemic. In addition, the higher the level of digitization of firms during the COVID-19 pandemic, the more it contributed to the enhancing effect of the SARS seal on firm recovery. Our study makes an important theoretical contribution to the recovery literature as well as to imprinting theory, while providing practical guidance for improving the recovery of firms during the COVID-19 pandemic.

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“…First, CEO age is the only individual characteristic, from the executives' and directors' perspective, that presents a constant effect on market volatility. According to the literature, CEO age can João Teodósio / Mara Madaleno / Elisabete Vieira worsen market volatility, where the older the CEO, the lower the firm's risk (Jiraporn & Lee, 2018;Korkeamäki, Liljeblom, & Parternack, 2018;Serfling, 2014). Second, the influence of board independence depends on the context in which it is analyzed.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Corporate governance effects on market volatility: Empirical evidence from Portuguese listed firms

Teodósio¹,

Madaleno²,

Vieira³

2022

RBGN

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Purpose -This study examines the relationship between internal corporate governance mechanisms and firm risk-taking. Design/methodology/approach -This research comprises a sample of 38 non-financial Portuguese firms listed on Euronext Lisbon, over the period from 2007 to 2017. To test the formulated hypotheses we use panel-corrected standard errors (PCSE) models. Findings -Our results provide evidence that, in the Portuguese context, bigger and younger firms, with larger boards of directors and a greater number of independent directors, present higher levels of systematic risk. Our results are consistent across the robustness checks. Originality/value -To the best of our knowledge, this is the first time that a robust incremental effect of board size on firm systematic risk is reported. This result contradicts the prevailing literature and opens up a new debate, from a financial markets viewpoint, on the benefits of larger boards of directors in terms of mitigating market volatility.

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CEO's Total Wealth Characteristics and Implications on Firm Risk

Cited by 7 publications

References 59 publications

CEO power and corporate risk: The impact of market competition and corporate governance

CEO power and corporate risk: The impact of market competition and corporate governance

Sadder but Wiser: The Role of SARS Imprinting and Firms’ Recovery During the COVID-19 Pandemic

Corporate governance effects on market volatility: Empirical evidence from Portuguese listed firms

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