CEO risk preference, enterprise characteristics, and goodwill value: evidence from China

Xi Zhao, Xiaotong Niu and Jiaqi Chen

Asia-Pacific Journal of Accounting & Economics, 2022, vol. 29, issue 5, 1135-1155

Abstract: This study investigates the relationship between CEO risk preferences in companies completed mergers and acquisitions (M&A) and the goodwill generated by M&A. The analysis period ranges from 2014 to 2018, which represents the recent ‘boom’ in China’s M&A market. We estimate CEO risk preference by using factor analysis and regress the goodwill on CEO risk preference while controlling for firms’ characteristics. The results show that CEOs with a high-level risk preference are willing to accept a higher value of goodwill. This positive correlation is more significant in non-state-owned or lower ownership concentration companies, and firms within a suitable debt capacity.

Date: 2022
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DOI: 10.1080/16081625.2020.1787853

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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