Abstract
This paper conducts a systematic analysis of the effect of CEO tenure on risk-taking. We document an overall positive effect of tenure on risk-taking, which is inconsistent with viewing tenure primarily as an indicator of human capital investment. Though we can not rule out the explanations based on the power and experience effects of tenure, our results are more consistent with interpreting tenure as the career concerns of a manager. Consistent with this interpretation and recent theoretical work, we show that the effect of CEO tenure on risk-taking depends on the information asymmetry about CEO ability.
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