Top Management Team Heterogeneity And Corporate Risk-taking

Corporate risk-taking reflects the comprehensive risk results formed by various decisions.Excessive risk-taking will promote the rapid development of corporate,accelerate the accumulation of social capital and improve technological progress,but it is also easy to get corporate into trouble.Excessively low risk-taking of corporate implies the reduction of capital expenditure,insufficient risk investment and innovation investment,which will lead to the decline of business performance and insufficient future development.Reasonable risk-taking has been proved to be an important way for corporate to gain long-term competitive advantages and maintain long-term development.The academic circle has conducted in-depth research on the influencing factors and economic consequences of risk-taking,and they have achieved fruitful results.As one of the influencing factors of risk-taking,the characteristics of managers have attracted more and more attention.With the proposal and development of Upper Echelons Theory,scholars have changed the research object from a single manager to top management team.This is because the top management team is the most influential group in corporate,which is not only the direct decision maker of corporate investment,merger and acquisition,operation and other risk activities,but also the concrete implementer.However,the members of the top management team with different background characteristics have differences in cognitive ability,value orientation,behavior style,work experience and other aspects,and this heterogeneity makes them make different choices for the same risk decision,thus will affect the risk-taking of the corporate.This thesis tries to break through the limitation that the current literature only focuses on the single characteristics of the members of top management team,and discusses the influence of comprehensive diversity index of top management team on the corporate risk-taking.At the same time,the effect of the top management team heterogeneity will be affected by its overall decision-making freedom.This thesis also selects institutional investors,an external supervision subject,as the moderating variable to test its impact on the relationship between the top management team heterogeneity and corporate risk-taking.This thesis consists of the following six parts:The first part is the introduction.First of all,this part introduces the background and research significance of this topic,then briefly describes the research framework and research methods,and finally summarizes possible innovation of this thesis.The second part is literature review.This part focuses on the three core concepts of top management team heterogeneity,risk taking and institutional investors.For the literature related to the top management team heterogeneity,it systematically combs and summarizes the concept definition,classification and its impact on corporate performance.As for risk-taking,it summarizes the influencing factors from the external and internal aspects.And for institutional investors,this part mainly combs the governance effect of institutional investors and its impact on risk-taking.At the end of this part,by reviewing the existing literature,the entry point of this thesis is clarified and the research content is determined.The third part is theoretical analysis and research hypothesis.On the basis of literature review,this part first introduces three basic theories:principal-agent theory,upper echelons theory and resource dependence theory.Next,theoretical deduction is made,and the research hypotheses of this thesis are put forward,including:the hypothesis of the direct relationship between the top management team heterogeneity and corporate risk-taking,and the hypothesis of the regulatory effect of institutional investors.The fourth part is research design.This part carries out a reasonable and effective empirical design for the hypothesis,including data sources and sample selection,variable definition and quantification method,and construction of model and the empirical method.The fifth part is empirical results and analysis.This part mainly reports the empirical results of data,including the results of descriptive statistics,correlation analysis and regression analysis.To make the research conclusions more substantial and reliable,further analysis and robustness test are finally carried on.The sixth part is the research conclusion and policy suggestion.In this part,the empirical results are summarized,and theoretical contribution and practical enlightenment of the conclusions are elaborated.This part also explains some limitations and deficiencies,and on this basis,the possible future research directions and prospects are proposed.Based on the A-share listed companies of Shanghai and Shenzhen stock markets in 2008-2015 as the research object,this thesis constructs a comprehensive heterogeneity index using the distinct managers' characteristics,and empirically testes its influence on the aggregate corporate risk-taking and specific risk-taking behaviors of corporate.At the same time,the effect of the heterogeneity of top management team will also be affected by its overall decision-making freedom.This thesis selects institutional investors,an external supervision force,as a moderating variable to explore its impact on the relationship between the top management team heterogeneity and corporate risk-taking.After the empirical analysis of samples,the following conclusions are mainly drawn:(1)Top management team heterogeneity is conducive to improving the aggregate corporate risk-taking level;(2)Institutional investor can inhibit the positive effect of the top management team heterogeneity on risk-taking.Moreover,in the further study,this thesis also finds that top management team heterogeneity promotes risk-taking partly by encouraging enterprises to invest more in R&D,and its effect corresponding to different types of characteristics are different,among which the professional heterogeneity of the top management team will increase the corporate risk-taking,while the social heterogeneity of the top management team has no significant effect.The innovation of this thesis is mainly reflected in the following two aspects:(1)To construct the comprehensive index of top management team heterogeneity and deepen the Upper Echelons Theory.Most studies on top management team heterogeneity are limited to the heterogeneity of single characteristic of executive team members,such as gender,age,education background or tenure,but fail to pay attention to the comprehensive effect of different characteristics.Moreover,due to different components and measurement standards of heterogeneity,relevant conclusions are not unified.In this thesis,the heterogeneity comprehensive index of top management team formed by the characteristics of different dimensions is constructed to explore the relationship between it and risk-taking.In further research,the influence results of the heterogeneity of relation-oriented and task-oriented dimensions on risk taking are tested respectively,thus deepening the Upper Echelons Theory.(2)To expand the research perspective of risk-taking.Although existing literatures have studied the influence of top management team heterogeneity on corporate performance,technological innovation,social responsibility,etc.,the research on its relationship with corporate risk-taking is not much.This thesis firstly empirically tested the relationship between top management team heterogeneity and the aggregate risk-taking level of enterprises,and further explored the possible path of the relationship between them--research and development investment,so as to obtain relatively comprehensive research results and enrich the relevant content of the influencing factors of risk-taking.In addition,combined with the principal-agent theory,the variable institutional investor shareholding is introduced to analyze its moderating effect between the top management team heterogeneity and corporate risk-taking.This is from the perspective of corporate outside monitors,different from existing literatures that chose the internal management decision-making power and freedom as regulating variable,which further expand the research perspective of risk-taking.