Age, Gender, and Risk-Taking: Evidence from the S&P 1500 Executives and Market-Based Measures of Firm Risk

57 Pages Posted: 10 Jan 2015 Last revised: 5 Sep 2019

See all articles by Jarkko Peltomäki

Jarkko Peltomäki

Stockholm University - Stockholm Business School

Steve Swidler

Auburn University - College of Business

Sami Vähämaa

University of Vaasa

Date Written: September 3, 2019

Abstract

This paper examines whether the age and gender of the firm’s top executives influence market-based measures of firm risk. Using data on the S&P 1500 firms, we document that firms led by older Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs) are associated with less volatile stock returns and lower levels of idiosyncratic risk. This finding suggests that executives become more risk averse with age and may constrain excessive risk-taking by their firms. Furthermore, although the relationship between executive gender and firm risk is more equivocal, our results show that female-led firms are more risky after controlling for firm-specific attributes, policy choices, and managerial risk-taking incentives. Our additional tests indicate that the effects of executive age and gender on market-based risk measures can be, at least to some extent, attributed to differences in corporate policy choices. We also document that female executives are younger than their male counterparts, and therefore the effect of executive gender on firm risk may be confounded by age-effects. Overall, our empirical findings demonstrate that the age and gender of the firm’s top executives may have important implications for corporate outcomes.

Keywords: Executives, CEOs, CFOs, age, gender, firm risk, risk-taking

JEL Classification: G01, G21, G30, G32

Suggested Citation

Peltomäki, Jarkko and Swidler, Steve M. and Vähämaa, Sami, Age, Gender, and Risk-Taking: Evidence from the S&P 1500 Executives and Market-Based Measures of Firm Risk (September 3, 2019). Available at SSRN: https://ssrn.com/abstract=2547516 or http://dx.doi.org/10.2139/ssrn.2547516

Jarkko Peltomäki

Stockholm University - Stockholm Business School ( email )

Stockholm
Sweden

Steve M. Swidler

Auburn University - College of Business ( email )

Auburn, AL 36849
United States
334-844-3014 (Phone)
334 -844-4960 (Fax)

HOME PAGE: http://www.business.auburn.edu/~swidlst/

Sami Vähämaa (Contact Author)

University of Vaasa ( email )

P.O. Box 700
Vaasa, FI-65101
Finland
+358 29 449 8455 (Phone)

HOME PAGE: http://www.uva.fi/~sami

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