CEO personal characteristics and firms’ risk-taking behaviour: the moderating role of family ownership

Abstract

Purpose: we examine the impact of Chief Executive Officers’ (CEO) personal characteristics on firms’ risk taking, and the moderating role of family ownership on this relationship.

Design/methodology/approach: we employed 2,647 firm-year observations of non-financial firms listed on Pakistan Stock Exchange over the period 2013-2021. To test the hypotheses, we used ordinary least squares regression and, to resolve the possible endogeneity problem, we employed system generalised method of moments (GMM) technique.

Findings: drawing insights first from upper echelons theory, we report that CEOs with business, economics, finance and/or management educational background and female CEOs reduce firms’ risk-taking behaviour. Further and utilising insights from social and organisational identity theoretical perspectives, our results indicate that due to strong family affiliation and organisational identity, family owners exhibit risk aversion behaviour and moderate this relationship.

Originality: our study provides novel evidence of risk averse behaviour of CEOs with business, economics, finance and/or management educational background and female CEOs along with moderating impact of family ownership on this relationship in an emerging economy. Overall, our results extend empirical support for upper echelons, organisational and social identity theories in an emerging market context.

Keywords: CEO personal characteristics, firm risk, family ownership, Upper Echelon theory, organizational theory, social identity theory

More information

Identifiers

ORCID for Collins Ntim: orcid.org/0000-0002-1042-4056

Catalogue record

Export record