The Impact of Top Management Team Characteristics on the Risk Taking of Chinese Private Construction Enterprises

Abstract

Private construction businesses have grown quickly, greatly boosting China’s economic growth; nonetheless, these businesses suffer tremendous developmental uncertainty, particularly when compared to larger state-owned businesses. The traits of the top management team (TMT) may have a direct impact on how risk-taking and decision-making behaviors are exhibited by businesses, according to earlier studies. The majority of private construction companies in China are family businesses with family members making up the majority of their top executives. As a result, these companies are vulnerable to family centralization, which will definitely boost their risk-taking level. This study used a sample of private listed companies in China’s construction industry from 2009 to 2019 to explore the impact of CEO traits on the risk-taking degree of enterprises. The findings show that a higher percentage of top female managers and a higher average rate of TMT member both lower the level of risk taking in private construction businesses. The level of risk taking, however, is positively impacted by the top management’s higher average education level. The average tenure and overseas experience of TMTs and the degree of risk taking in private construction enterprises are not significantly correlated. Additionally, the degree of risk taking in private construction firms can vary depending on the qualities of the senior management team.