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- Title
Do firms led by founders take higher risk?
- Authors
Lawrence, Edward; Nishikawa, Yuka; Upadhyay, Arun
- Abstract
This study examines whether firms led by founder‐CEOs are significantly different from firms led by nonfounder‐CEOs in terms of the nature of their risk. Our results show that founder‐led firms are associated with higher operational but lower financial risk. We find that the differential nature of risk‐taking in founder‐CEO firms is driven by CEO's influence, their propensity of removal, and the probability of bankruptcy of the firm. While CEO‐chair duality and the sensitivity of founder‐CEO firm's probable bankruptcy play significant roles in determining the level of financial risk, the sensitivity of founder‐CEOs to forced turnover leads to higher operational risk.
- Subjects
RISK-taking behavior; FINANCIAL risk; OPERATIONAL risk; BUSINESS enterprises
- Publication
Financial Review, 2024, Vol 59, Issue 3, p687
- ISSN
0732-8516
- Publication type
Article
- DOI
10.1111/fire.12388