The Influence of CEO Demographic Characteristics on Stock Return Volatility: Evidence from Chinese IPOs
Posted: 19 Aug 2014
Date Written: August 17, 2014
Stock markets continually reflect the assessment of CEOs’ characteristics into stock prices hence we expect that there might be a link between CEOs’ demographic characteristics and stock return volatility. We investigate the influence of CEOs’ demographic characteristics (e.g. age, tenure, education, gender and professional experience) and share ownership on stock return volatility for a sample of 892 IPOs floated in both the Shanghai and Shenzhen stock exchanges. Using fixed effects and system GMM models we find that greater stock return volatility is associated with younger and shorter tenured CEOs. This may imply that older and long tenured CEOs are more risk averse and are less likely to consider risky decisions. Interestingly, we find that IPOs’ volatility is likely to be less with female CEOs. This may suggest that female CEOs may not be risk averse compared with their male counterparts. Finally, whilst we find no significant relationship between CEO ownership and volatility, we find a positive and highly significant relationship between state ownership and stock return volatility.
Keywords: CEO characteristics; stock return volatility; risk; corporate governance; Initial Public Offerings (IPOs); China.
JEL Classification: G3; C3
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