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
Date Written: September 3, 2019
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: Suggested Citation