Birth Order and Executive Risk-Taking: A Study on CEO Behavioral Disposition

Abstract

This paper explores the potential influence of chief executive officers’ (CEOs’) birth order on corporate decision-making. Drawing upon both theoretical frameworks and existing empirical studies, birth order considerably impacts individual personality attributes and risk aversion tendencies. Our analyses reveal a pronounced positive association between CEO’s birth order and their propensity for risk-taking. Specifically, CEOs born later in their familial succession are more inclined to risk-taking than their first-born counterparts, who are more conservative. These findings persist after controlling for CEO characteristics, year, and industry-specific factors. Moreover, further analyses were conducted to mitigate potential selection biases in companies choosing CEOs with specific risk preferences.