Research On CEO Characteristics And Risk Hedging Strategy Selection

Deepening the marketization reform of interest rate and exchange rate provides conditions for the steady development of interest rate and exchange rate markets,but it objectively requires enterprises to strengthen the management and prevention of the risks.At the same time,the development of financial derivatives markets prompt enterprises to increase the use of derivative products,and the understanding of derivative products gradually returns to the micro-financial nature of risk management in domestic.Since the "Upper Echelons Theory" was proposed,more and more scholars have used different personal characteristics of managers to explain the heterogeneity of enterprise decision-making.Therefore,it is inevitable to analyze the personal characteristics of managers to explore the choice of enterprises who use derivatives to hedge their risks choices.Who would choose financial derivatives to avoid suffering the uncertainty of the enterprises future development? This paper uses derivatives as an alternative variable to reflect the risk hedging strategies of CEOs,and establishes the logical connection between the individual characteristics and decision-making behaviors of enterprise managers and derivative risk management.And based on the sample of A-share listed firms between 2013 and 2016 in China,this paper attempts to study the influences of CEOs characteristics on the choices of derivative strategies by using Logit model and Multi-value selection models.We make the following conclusions.Corporate risk management strategies contain the preferences of management.Female,maintain the advantage of salary and the sense of pride largely determine the choices of the risk hedging strategies of CEOs.Meanwhile,the abilities and levels of management,new officials or not and the differences of enterprises property which are formed by learning will result in the differences of the enterprises' risk hedging strategy choices.CEOs who have strong abilities will choose to use derivative products which will hedge risks for the sake of the sustainable development of the enterprises.However,enterprises without CEO turnovers hedged their risk more than those with CEO turnovers.It shows that a new official applies strict measures,so the new CEOs prefers risks to fight for the performance.This study breaks through the existing understanding of the traditional use of derivative products,expands the existing research paradigm of previous CEOs characteristics and risk management,enriches the theory of Upper Echelons Theory.And it provides a theoretical basis for understanding and explaining the micro behavior of Chinese enterprises which are using financial derivatives to hedge risks.