Firm Risk-Taking and CEO Visibility

Yixin Liu, Yilei Zhang () and Pornsit Jiraporn
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Yixin Liu: Department of Accounting and Finance, Peter T. Paul College of Business & Economics, University of New Hampshire, NH 03820, USA
Yilei Zhang: Department of Finance, Belk College of Business, University of North Carolina at Charlotte, NC 28223, USA

Quarterly Journal of Finance (QJF), 2016, vol. 06, issue 03, 1-23

Abstract: This paper investigates the relationship between CEO visibility and corporate risk-taking. The empirical results show that more visible CEOs tend to take more risk. A one-standard-deviation shock in the CEOs media exposure results in a 6.53% rise in total risk. We further investigate the channels of risk-taking activities and find that more visible CEOs seek more R&D investments. The positive effect of CEO visibility on firm risk policies is clearly of concern to bondholders. Consistent with this view, we report that CEO visibility has a significant negative effect on firm credit ratings. Our results highlight the importance of CEO visibility on a crucial corporate outcome — the extent of corporate risk-taking.

Keywords: CEO visibility; risk-taking; firm policies; credit rating (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S2010139216500105

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