CEO Tenure and Risk-Taking

Global Business and Finance Review, 2014, vol. 19, issue 1, p1-27

26 Pages Posted: 10 Apr 2012 Last revised: 11 Aug 2014

See all articles by Dong Chen

Dong Chen

University of Baltimore

Yudan Zheng

Long Island University

Date Written: August 10, 2014


This paper conducts a systematic analysis of the effect of CEO tenure on risk-taking. We document an overall positive relation between tenure and risk-taking. The results are inconsistent with viewing tenure primarily as an indicator of human capital investment. Though we can not rule out the explanations based on the power and experience effects of tenure, our results are more consistent with interpreting tenure as the career concerns of a manager. Consistent with this interpretation and recent theoretical work, we show that the effect of CEO tenure on risk-taking depends on the information asymmetry about CEO ability.

Keywords: Corporate Governance, CEO Tenure, Risk Taking, Pay-Performance Sensitivity, Pay-Volatility Sensitivity, Career Concern, Managerial Power, Entrenchment, Experience, Human Capital Investment

JEL Classification: G30, G34

Suggested Citation

Chen, Dong and Zheng, Yudan, CEO Tenure and Risk-Taking (August 10, 2014). Global Business and Finance Review, 2014, vol. 19, issue 1, p1-27. Available at SSRN: or

Dong Chen (Contact Author)

University of Baltimore ( email )

1420 N. Charles Street
Baltimore, MD 21201
United States

Yudan Zheng

Long Island University ( email )

1 University Plaza
Brooklyn, NY 11201
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics