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Do younger CEOs really increase firm risk? Evidence from sudden CEO deaths

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  • Trabert, Sebastian

Abstract

This study uses sudden deaths of CEOs to provide causal evidence on the relation between CEO age and firm risk. I find that CEO age negatively influences firm risk, measured by stock return volatility, but has no effect on policy choices related to risk taking. These findings contrast prior studies, and suggest that the higher volatility is caused by uncertainty about the younger replacement CEOs' contribution to firm value, rather than changes to risk-related corporate policies.

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  • Trabert, Sebastian, 2023. "Do younger CEOs really increase firm risk? Evidence from sudden CEO deaths," Journal of Corporate Finance, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:corfin:v:79:y:2023:i:c:s0929119923000160
    DOI: 10.1016/j.jcorpfin.2023.102367
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    More about this item

    Keywords

    CEO age; CEO effects; Sudden deaths; Firm risk; Risk-taking;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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