The Influence of CEO Demographic Characteristics on Stock Return Volatility: Evidence from Chinese IPOs

Posted: 19 Aug 2014

See all articles by Hisham Farag

Hisham Farag

University of Birmingham - Birmingham Business School

Chris Mallin

Norwich Business School, University of East Anglia; University of Birmingham - Birmingham Business School

Date Written: August 17, 2014

Abstract

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

Suggested Citation

Farag, Hisham and Mallin, Christine, The Influence of CEO Demographic Characteristics on Stock Return Volatility: Evidence from Chinese IPOs (August 17, 2014). Available at SSRN: https://ssrn.com/abstract=2481867

Hisham Farag (Contact Author)

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Christine Mallin

Norwich Business School, University of East Anglia ( email )

Norwich Research Park
Norwich, NR4 7TJ
United Kingdom

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

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