How Much Does the CEO’s Age Impact Corporate Performance Under a Changing Environment?

Joohee Han and Sung Jun Jo ()
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Joohee Han: Department of Business Administration, Gachon University, Seongnam-si 13120, Republic of Korea
Sung Jun Jo: Department of Business Administration, Gachon University, Seongnam-si 13120, Republic of Korea

Administrative Sciences, 2024, vol. 14, issue 11, 1-11

Abstract: The recent technological innovations and the consequences of the pandemic are rapidly changing the management paradigm. Organizations that seek to survive and remain competitive must adapt to these changes. One strategy to cope with these environmental changes is to hire a younger CEO. This study aims to empirically analyze how the age of the CEO affects the performance of the firm based on upper echelons theory. Using a sample of 706 CEOs of companies listed on the South Korean public stock market (KOSPI) as of 2023, we found that CEO age is positively related to financial performance. We also found that CEO age is negatively related to risk-taking behavior and innovation. These findings have both practical and theoretical implications, suggesting that the recent shift to the relationship between a long-term perspective and innovation have positive implications. Young CEOs often seek these perspectives and are more willing to be aggressive in investment and risk-taking behaviors in the interests offor an innovative business.

Keywords: CEO age; financial performance; R&D investment; R&D intensity; upper-echelon theory (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2024
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