Academic Experience Of Senior Executives,Income Smoothing And Exchange Rate Risk

Exchange rate fluctuations will have a certain degree of impact on the daily transactions,investment decisions and financial statements conversion.Since the exchange rate system reform in 2005,the RMB exchange rate has gradually moved towards marketization and internationalization,which has increased the range of exchange rate fluctuations and accelerated the frequency of exchange rate fluctuations.Therefore,more and more enterprises began to gradually improve the exchange rate risk management system,actively seeking various hedging tools to avoid exchange rate risk.The "top echelon theory" shows that senior executives' professional experience significantly affects their attitude to risk,and ultimately has a significant impact on the company's management decisions.The core of risk management decision making,its governance level also plays a vital role in risk management decision-making,so the academic experience of senior executives may also have a certain impact on the exchange rate risk of the company.In addition,the two-way fluctuation of RMB exchange rate leads to a high degree of uncertainty in the operating environment of the company,which makes the company more inclined to use income smoothing to reduce the impact of uncertainty.Therefore,this paper first examines whether the academic experience of senior executives has an impact on the exchange rate risk of listed companies;then,from the perspective of income smoothing,the paper examines the mechanism of the influence of senior executives' academic experience on exchange rate risk.Based on the research on academic experience,income smoothing and exchange rate risk of senior executives,this paper makes use of the data of Shanghai and Shenzhen A-share listed companies from 2008 to 2016.This paper empirically examines the influence of senior executives' academic experience on the exchange rate risk of listed companies and the corresponding mechanism.It is found that executives with academic experience can effectively reduce the exchange rate risk of listed companies based on their strong awareness of risk aversion and corporate governance ability.The conclusion is still true in the Heckman test and PSM test,which indicates that the conclusion is still true in the case of controlling endogeny,and the stability of the explained variable and the explanatory variable is replaced.This conclusion remains true in the robustness test.The results of intermediary effect model show that the academic experience of executives canimprove the degree of income smoothing of listed companies,and income smoothing can help to reduce the exchange rate risk of listed companies,and the academic experience of senior executives can reduce the exchange rate risk of listed companies through the behavior of income smoothing.The findings of the study are still valid when it comes to replacing a smoothing measure of earnings.Based on the background of large fluctuation of RMB exchange rate,this paper studies the relationship between the academic experience of senior executives and exchange rate risk,complements the relevant literature on the personal characteristics of senior executives,and verifies the applicability of "high-level echelon theory" in the field of exchange rate risk management.To a certain extent,it also enriches the relevant research on exchange rate risk,and reveals that the academic experience of senior executives affects exchange rate risk through income smoothing behavior,and further explores the causality chain between the academic experience of senior executives and enterprises.It enriches the action mechanism of executives' academic experience and provides empirical evidence on how to manage exchange rate risk.