Abstract
This paper investigates how chairman age affects corporate diversification decision-making in China, a country where corporate chairmen typically hold the most power in their firms. After controlling for education, gender, firm-characteristics, and macro-economic factors, we find robust evidence that older chairmen tend to pursue diversification strategy more than their counterparts. The empirical results imply that senior chairmen are risk-averse and impose their life cycle into corporate diversification strategy of their firms. The impact is stronger in firms with older chairmen, larger firm, firms with female chairs, and firms with lower profitability. Interestingly, we do not find such an effect in state-owned enterprises, suggesting that state patronage might help neutralize the risk aversion of older chairmen in Chinese firms.
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