%0 Journal Article
%T Does CEOs¡¯ Overseas Experience Promote Corporate Risk-Taking
%A Peiwen Cao
%A Weifeng Fu
%A Hongquan Li
%J Theoretical Economics Letters
%P 41-66
%@ 2162-2086
%D 2024
%I Scientific Research Publishing
%R 10.4236/tel.2024.141004
%X This study conducts a comprehensive analysis of the significant role
played by senior executives with international experience in shaping the
strategic decision-making processes within corporations, particularly focusing
on their impact on corporate risk-taking behaviors. The investigation utilizes
a robust dataset from Chinese A-share listed companies spanning 2008 to 2021,
examining the relationship between executives¡¯ global backgrounds and the
extent of risk undertaken by firms. The findings indicate a strong correlation,
highlighting that international experience among executives notably intensifies
corporate risk-taking, primarily manifested through increased investments in
research and development. Furthermore, the study delves into the mechanisms of
this influence, exploring the role of executive decision-making within the
context of the corporate governance environment. It is observed that the
increase in risk is significantly more pronounced in scenarios where executives
possess greater discretionary power, especially in companies with a merged CEO
and chairman role and in state-owned enterprises. To address potential
endogeneity issues, a two-stage least squares estimation method is employed.
Additionally, a system dynamic generalized method of moments method (DSGMM) of
moments is utilized to analyze the temporal patterns of risk-taking, revealing
a consistent trend across corporations. Moreover, the research integrates a
robust methodological framework, combining Propensity Score Matching (PSM) with
multi-period Difference-in-Differences (MDID) analysis. This methodology is
pivotal in examining variations in corporate risk pre- and post-executive
transition, providing a comprehensive and direct examination of the causal link
between executives¡¯ international experience and their propensity for corporate
risk-taking. The insights from this study are expected to significantly
contribute to the understanding of how executive international exposure and the
broader corporate governance context impact corporate risk management
strategies. These findings offer valuable implications for refining corporate
governance and aligning human capital strategies more effectively with evolving
business environments.
%K Foreign Experience
%K Corporate Risk-Taking
%K Corporate Governance
%K Upper Echelons Theory
%K Chinese Listed Companies
%U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=131137