{"title":"Do firms led by founders take higher risk?","authors":"Edward Lawrence, Yuka Nishikawa, Arun Upadhyay","doi":"10.1111/fire.12388","DOIUrl":null,"url":null,"abstract":"<p>This study examines whether firms led by founder-CEOs are significantly different from firms led by nonfounder-CEOs in terms of the nature of their risk. Our results show that founder-led firms are associated with higher operational but lower financial risk. We find that the differential nature of risk-taking in founder-CEO firms is driven by CEO's influence, their propensity of removal, and the probability of bankruptcy of the firm. While CEO-chair duality and the sensitivity of founder-CEO firm's probable bankruptcy play significant roles in determining the level of financial risk, the sensitivity of founder-CEOs to forced turnover leads to higher operational risk.</p>","PeriodicalId":47617,"journal":{"name":"FINANCIAL REVIEW","volume":"59 3","pages":"687-717"},"PeriodicalIF":2.6000,"publicationDate":"2024-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"FINANCIAL REVIEW","FirstCategoryId":"1085","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/fire.12388","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This study examines whether firms led by founder-CEOs are significantly different from firms led by nonfounder-CEOs in terms of the nature of their risk. Our results show that founder-led firms are associated with higher operational but lower financial risk. We find that the differential nature of risk-taking in founder-CEO firms is driven by CEO's influence, their propensity of removal, and the probability of bankruptcy of the firm. While CEO-chair duality and the sensitivity of founder-CEO firm's probable bankruptcy play significant roles in determining the level of financial risk, the sensitivity of founder-CEOs to forced turnover leads to higher operational risk.
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