Childhood socioeconomic status of Chinese entrepreneurs and company risk-taking

Using the data of Chinese-listed privately held companies from 2012 to 2019, this paper investigates the impact of entrepreneurship on the level of corporate risk-taking from the perspective of childhood family social class. Firstly, it reveals that entrepreneurs' childhood family social class significantly affects their financial decisions: entrepreneurs growing up in higher social class families tend to exhibit higher levels of risk tolerance, which increases their firms' risk-taking levels during the investment decision-making process. Secondly, this paper shows that entrepreneurs' education and political identity moderate the relationship between their childhood family social class and the level of firm risk-taking. Furthermore, it demonstrates that growing up in a family with a higher social class strengthens the entrepreneur's risk tolerance, regardless of whether the entrepreneur grew up in an affluent area or an impoverished area. Thirdly, this paper indicates entrepreneurs coming from a higher social class family in an affluent area have a stronger risk preference. The paper verifies the hypothesis that the social class of the entrepreneur's childhood family is an important factor influencing firm behavior. Additionally, it provides new evidence in the field of corporate finance regarding how entrepreneurs' background characteristics impact firm behavior.