An Empirical Study On The Relationship Between Chief Executive Officers' Education Background And Their Companies' Operating Risk

Currently,risk prevention and control have become a top priority of our government's economic work.Various types of research on the topic of risk are emerging in academic discussions in various fields.Based on the current background and existing research,this paper decided to select the company's operating risk as a specific perspective.On the other hand,with the upper echelons theory,the research on the correlation between personal characteristics of the chief executive officer(hereinafter referred to as CEO)and company characteristics has been increasing in the field of behavioral finance.Some literature has demonstrated the correlation between CEO personal characteristics and company operating risk.However,the relationship between the CEO's education background and the company's operating risk has not been thoroughly discussed.Therefore,this paper finally chose to study the relationship between the CEO's education background and the company's operating risk.This paper illustrates the theoretical basis of the research by discussing the upper echelons theory and the limited rationality assumption of the behavioral finance.At the same time,it analyzes the influence mechanism between individual education background and risk decision-making.Subsequently,this paper takes the 2,418 CEOs of 1,635 listed companies during the ten-year period from 2007 to 2016 as a measurement sample,and adopts a random-effect model to perform data regression.The final conclusion is that the CEO's education background is negatively related to the company's operating risk.That is,the higher the academic level of the CEO,the lower the company's operating risk.This paper also uses the mixed regression model,the fixed effect model,the increasing of the CEO gender and age squared control variable,the replacement of the educational level variable's definition method to ensure the robustness of the conclusion.From the theoretical perspective,the significance of this paper lies in the exploration of the relationship between CEOs' education background and companies'operating risk,through which relaxes the completely rationality assumption in the traditional financial theory.From the practical perspective,this paper provides some reference for the decision-making of the company's CEO appointment from the perspective of education background.The innovation of this paper lies in manually collecting and verifying CEO related sample data,and conducting empirical analysis from the specific perspective of the relationship of CEOs' education background and companies' operating risk.The deficiencies of this paper are due to missing data and deletion of some anomalous observations,resulting in an imperfect sample and not including samples of non-listed companies.At the same time,due to the limitation of information,this paper failed to carry out more detailed and in-depth classification research on the education background of the CEO.