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Firm Risk-Taking and CEO Visibility

Author

Listed:
  • 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)

  • Pornsit Jiraporn

    (Great Valley School of Graduate Professional Studies, Pennsylvania State University, Malvern, PA 19355, USA)

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.

Suggested Citation

  • Yixin Liu & Yilei Zhang & Pornsit Jiraporn, 2016. "Firm Risk-Taking and CEO Visibility," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-23, September.
    • Handle: RePEc:wsi:qjfxxx:v:06:y:2016:i:03:n:s2010139216500105
    DOI: 10.1142/S2010139216500105
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    Cited by:

    1. Gao, Xin & Xu, Weidong & Li, Donghui, 2022. "Media coverage and corporate risk-taking: International evidence," Journal of Multinational Financial Management, Elsevier, vol. 65(C).

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