Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision

Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision

From the upper echelons perspective, we investigate the financial leverage decision of publicly listed companies in Bursa Malaysia for the period from 2002 to 2011. Using pooled OLS and fixed-effect regressions, we examine the impacts of CEO personal characteristics on financial leverage. Our measur...

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Main Authors: Noor Azlinna, Azizan, Irene, Wei Kiong Ting, Qian, Long Kweh
Format: Article
Language:English
Published: Elsevier 2015
Subjects:
T Technology (General)
Online Access:http://umpir.ump.edu.my/id/eprint/9969/
http://umpir.ump.edu.my/id/eprint/9969/
http://umpir.ump.edu.my/id/eprint/9969/
http://umpir.ump.edu.my/id/eprint/9969/1/Upper%20Echelon%20Theory%20Revisited-%20The%20Relationship%20between%20CEO%20Personal%20Characteristics%20and%20Financial%20Leverage%20Decision.pdf
id ump-9969
recordtype eprints
spelling ump-99692018-10-11T07:48:02Z http://umpir.ump.edu.my/id/eprint/9969/ Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision Noor Azlinna, Azizan Irene, Wei Kiong Ting Qian, Long Kweh T Technology (General) From the upper echelons perspective, we investigate the financial leverage decision of publicly listed companies in Bursa Malaysia for the period from 2002 to 2011. Using pooled OLS and fixed-effect regressions, we examine the impacts of CEO personal characteristics on financial leverage. Our measures of CEO personal characteristics such as CEO overconfidence based on CEO profile photo, CEO age, and CEO prior experience are significantly and negatively related to leverage. However, CEO education level and CEO tenure are significantly and positively related to leverage. Furthermore, we partition our sample of companies based on CEO age and CEO education level. In the CEO-age group, we find that female CEOs are greater risk takers as compared to male CEOs in Malaysia. With respect to CEO education level, we show that younger CEOs, female CEOs, and longer-serving CEOs are risk takers and more aggressive. This paper contributes to the debate of the UET as well as determinants of leverage decision from several dimensions. First, this is the first study that investigates the impacts of CEO personal characteristics on financial leverage of Malaysian firms. Second, we make the first attempt by classifying CEO certain characteristic (age and educational level) into groups to make a further comparison on the impact of CEO personal characteristics on financial leverage. Third, this study uses a larger data sample and a longer study period than the previous studies in the literature. Fourth, the paper also makes a methodological contribution. This study employs different methods (pooled OLS regression and fixed effects panel regression) for the analysis. It is hoped that the result of this paper can fill the gap of the literature on the relationship between CEO personal characteristics and financial leverage as explained by Upper Echelon Theory. Elsevier 2015 Article PeerReviewed application/pdf en cc_by_nc_nd http://umpir.ump.edu.my/id/eprint/9969/1/Upper%20Echelon%20Theory%20Revisited-%20The%20Relationship%20between%20CEO%20Personal%20Characteristics%20and%20Financial%20Leverage%20Decision.pdf Noor Azlinna, Azizan and Irene, Wei Kiong Ting and Qian, Long Kweh (2015) Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision. Procedia Social and Behavioral Sciences, 195. pp. 686-694. ISSN 1877-0428 (print); 1877-0428 (online) http://dx.doi.org/10.1016/j.sbspro.2015.06.276 DOI: 10.1016/j.sbspro.2015.06.276
repository_type Digital Repository
institution_category Local University
institution Universiti Malaysia Pahang
building UMP Institutional Repository
collection Online Access
language English
topic T Technology (General)
spellingShingle T Technology (General)
Noor Azlinna, Azizan
Irene, Wei Kiong Ting
Qian, Long Kweh
Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision
description From the upper echelons perspective, we investigate the financial leverage decision of publicly listed companies in Bursa Malaysia for the period from 2002 to 2011. Using pooled OLS and fixed-effect regressions, we examine the impacts of CEO personal characteristics on financial leverage. Our measures of CEO personal characteristics such as CEO overconfidence based on CEO profile photo, CEO age, and CEO prior experience are significantly and negatively related to leverage. However, CEO education level and CEO tenure are significantly and positively related to leverage. Furthermore, we partition our sample of companies based on CEO age and CEO education level. In the CEO-age group, we find that female CEOs are greater risk takers as compared to male CEOs in Malaysia. With respect to CEO education level, we show that younger CEOs, female CEOs, and longer-serving CEOs are risk takers and more aggressive. This paper contributes to the debate of the UET as well as determinants of leverage decision from several dimensions. First, this is the first study that investigates the impacts of CEO personal characteristics on financial leverage of Malaysian firms. Second, we make the first attempt by classifying CEO certain characteristic (age and educational level) into groups to make a further comparison on the impact of CEO personal characteristics on financial leverage. Third, this study uses a larger data sample and a longer study period than the previous studies in the literature. Fourth, the paper also makes a methodological contribution. This study employs different methods (pooled OLS regression and fixed effects panel regression) for the analysis. It is hoped that the result of this paper can fill the gap of the literature on the relationship between CEO personal characteristics and financial leverage as explained by Upper Echelon Theory.
format Article
author Noor Azlinna, Azizan
Irene, Wei Kiong Ting
Qian, Long Kweh
author_facet Noor Azlinna, Azizan
Irene, Wei Kiong Ting
Qian, Long Kweh
author_sort Noor Azlinna, Azizan
title Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision
title_short Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision
title_full Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision
title_fullStr Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision
title_full_unstemmed Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision
title_sort upper echelon theory revisited: the relationship between ceo personal characteristics and financial leverage decision
publisher Elsevier
publishDate 2015
url http://umpir.ump.edu.my/id/eprint/9969/
http://umpir.ump.edu.my/id/eprint/9969/
http://umpir.ump.edu.my/id/eprint/9969/
http://umpir.ump.edu.my/id/eprint/9969/1/Upper%20Echelon%20Theory%20Revisited-%20The%20Relationship%20between%20CEO%20Personal%20Characteristics%20and%20Financial%20Leverage%20Decision.pdf
first_indexed 2023-09-18T22:09:09Z
last_indexed 2023-09-18T22:09:09Z
_version_ 1777414910727159808

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