CEO Characteristics and Risk-Taking under Economic Policy Uncertainty

Abstract

This paper investigates the effects of such CEO characteristics as gender, age, and education on the CEOs’ risk-taking behavior during periods of economic policy uncertainty. The paper utilizes Execucomp, BoardEx, and Compustat data from 2005 to 2017 in order to give a novel perspective on how CEO characteristics may provide differing risk-taking positions when faced with varying levels of uncertainty. The results offer robust evidence that older CEOs generally take less risk—regardless of the level of economic policy uncertainty. However, more educated CEOs take less risk only during economically uncertain times. The results also indicate that while female CEOs tend to be younger and have lower levels of education, gender does not provide a significant difference in risk-taking behavior during periods of economic policy uncertainty. Furthermore, we do not find any significant effect of insider status or corporate governance variables on CEO risk-taking under economic policy uncertainty once gender, age, and education are controlled for.