How Does CEO Demission Threat Affect Corporate Risk-Taking in China

Abstract

This study investigates the non-linear relationship between CEO demission threats and corporate risk-taking levels. We first estimate the degree of CEO demission threats, and then examine how CEO demission threats affect the level of corporate risk-taking. Using the data of China's A-share listed companies from 2007 to 2017, we find that the non-linear relationship is shown as an inverted U type in which the moderate CEO demission threats increase the level of corporate risk taking, however, the imminent demission threats of CEO reduce the level of corporate risk-taking. Further evidence demonstrates that the state-owned attribute of companies weakens the effect of CEO demission threat on corporate risk-taking and the eastern attribute of companies strengthens the effect of CEO demission threat on corporate risk-taking.