Document Type

Article

Publication Date

2019

DOI

10.11114/aef.v6i4.4319

Publication Title

Applied Economics and Finance

Volume

6

Issue

4

Pages

36-40

Abstract

The objective of this paper is to analyze the relationship between the ownership level of managers and the risk averse behavior of the firm. We measure the ownership level of the managers by the ratio of their ownership of the company relative to their total wealth for a sample of 69 individuals from the Forbes 400 list of the wealthiest individuals in the world for the period from 2001-11 using an unbalanced panel data analysis. The dependent variable is the Altman Z-score of each firm and we further test these relationships using financial leverage. The independent variables are delta and Vega of the option portfolio of the manager, R&D for the firm, total assets, the age of the manager, the tenure of the manager, stock holding of the manager, CEO/Chair duality of the manager and firma age. The Z-score is statistically significantly related to size, CEO age, CEO wealth, and duality. Financial leverage is not statistically significantly related to any of the independent variables.

Comments

"This journal provides immediate open access to its content on the principle that making research freely available to the public supports a greater global exchange of knowledge."

Published under an Attribution 3.0 Unported (CC BY 3.0) license.

Original Publication Citation

Mandal, S., Swartz, C., Gruha, S., & McGowan, C. B. J. (2019). How CEO wealth affects the riskiness of a firm. Applied Economics and Finance, 6(4), 36-40. doi:10.11114/aef.v6i4.4319

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