The Impact Of CEO's Founder Status,Education Level On Corporate Risk-taking Level In Private Listed Companies

This paper examines the impact of CEO's founder identity,age and education level on firm's overall risk-taking level,financial risk-taking level and investment decision-making risk-taking level.Selecting 633 private listed companies on 1999-2015 as a sample,we draw some conclusions.The impact of founder CEOs on enterprises' risk-taking level is comprehensive.On the one hand,according to risk aversion theory,founder CEOs will reduce the overall and financial risk-taking levels of enterprises.Once enterprises are facing business failure,based on the connection of material wealth and non-material wealth with companies,founder CEOs become more conservative.This indicates that,in the process of enterprise development,the appointment of professional managers(non-founder CEOs)is necessary.Because founders may become an obstacle in the development process,professional managers will significantly improve the corporate overall business risk-taking capacity.On the other hand,founder CEOs do not necessarily reduce risk-taking level of corporate investment decision-making.Founder CEOs in information transmission,software and information technology service industry will significantly improve the enterprise R&D investment intensity.In add it ion,to certain extent,founder CEOs tend to reduce the costs of the principal-agent problem.The results show that although founder CEOs do not improve total assets turnover of enterprises,they reduce the overhead expenses rate,which shows that founder CEOs will not directly sacrifice the interests of the enterprise for themselves.Finally,our research shows that the higher the CEOs'education level,in manufacturing and other industries,the higher the level of corporate investment decis ion-making risk-taking.Therefore,enterprises in manufacturing and other industries can improve the level of corporate investment decision-making risk-taking by raising CEOs' education level.Besides,CEOs' age has no significant impact on firm's risk-taking level.The innovation of this paper lies in:First,our paper comprehensively studies the influence of founder CEOs on enterprises' risk-taking level.Chen Chuang and Liu Tianyu(2012)studied the influence of founder CEOs on enterprises R&D investment,but R&D investment only occupies a portion of firms' uncertain expected earnings and uncertain expected cash flows.Our paper studies three aspects of corporate risk taking:overall risk-taking level,financial risk-taking level and investment decision-making risk-taking level.So our paper is a comprehensive research of the impact of founder CEOs on private listed companies.Second,the paper examines founder CEOs' influence in more detail.In the view of investment decision-making risk-taking,the observations are divided into three different groups.So we can refine the impact of the founder CEOs in different industries.Thirdly,principal-agent theory,behavior theory,psychological ownership theory,housekeeper theory and risk aversion argument are not only theoretical bases of this paper,but also are enriched by our empirical studies.Through the study of founder-CEO and enterprise bankruptcy risk,risk aversion argument is supported.Besides,through the study of founder-CEO and enterprise agency costs,principal-agent theory is discussed.So the content of existing theory is enriched.The practical significance of the thesis lies in that our conclusions can help investors gain deep understanding of the impact of CEO's founder identity and education level on corporate risk-taking level.So investors can make beneficial investment choices.At the same time,this also provides policy guidance for private listed companies on whether to hire professional managers to improve corporate overall risk-taking level.