Chinese CEO, Risk Taking and the Power of CEO: Empirical Evidence from Malaysian Family Firms

Swee-Sim Foong (), Jiunn-Shyan Khong () and Boon-Leong Lim ()
Additional contact information
Swee-Sim Foong: Management Section, School of Distance Education, Universiti Sains Malaysia
Jiunn-Shyan Khong: School of Management, Universiti Sains Malaysia
Boon-Leong Lim: Department of Accountancy and Business, Penang Branch Campus, Tunku Abdul Rahman University College

Malaysian Journal of Economic Studies, 2021, vol. 58, issue 1, 59-84

Abstract: This paper examines the risk taking behaviour of Chinese CEO. Our analysis is based on a sample of 362 family firms in Malaysia over the 2009-2015 period using panel GMM methodology. Firstly, our results offer evidence that Chinese CEOs are risk taking. We then examine how CEO power, in the context of Finkelstein’s (1992) structural power, ownership power, expert power and prestige power, might drive risk taking of Chinese CEOs. The results are rather mixed where greater ownership power is likely to promote higher risk taking but greater expert power resulted in lower risk taking. We further show that corporate governance can mitigate risk taking of Chinese CEO in family firms. When the proportions of independent directors and foreign institutional shareholdings exceed the median thresholds of 40% and 5%, respectively, we find that CEO risk taking behaviour turns from positive to negative. Stronger evidence is found when we adjust the thresholds to the 75th percentile of 50% and 15%, respectively. The result is also robust with the use of leverage as a measure for CEO risk taking.

Keywords: CEO power; Chinese CEO; corporate governance; risk taking (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mjr:journl:v:58:y:2021:i:1:p:59-84

DOI: 10.22452/MJES.vol58no1.4

Access Statistics for this article

Malaysian Journal of Economic Studies is currently edited by Lim Kian Ping

More articles in Malaysian Journal of Economic Studies from Faculty of Business and Economics, University of Malaya & Malaysian Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Malaysian Economic Association ().