Are senior management with academic experience more cautious? Empirical evidence from corporate risk-taking

PurposeBased on upper echelons theory, this study aims to explore the impact of senior management's academic experience on corporate risk-taking and analyze the pathways and potential moderating effects of this relationship.Design/methodology/approachThis study uses panel data of Chinese A-share listed companies in the Shenzhen Stock Exchange and Shanghai Stock Exchange from 2008 to 2020. An ordinary least squares model is used to test the hypothesis.FindingsThe results indicate that senior management's academic experience suppresses corporate risk-taking, with investment level and cash reserves being two important channels. The moderation effect test shows that the inhibitory effect becomes more pronounced when senior managers with academic backgrounds occupy chief executive officer or chief financial officer roles. Conversely, when academic executives possess overseas/financial backgrounds or increase their compensation incentives, the strength of this disincentive effect diminishes. Moreover, our extended research finds that this inhibitory effect is more pronounced in state-owned companies and those within a strong Confucian cultural environment. Additionally, senior management's academic experience positively correlates with both current and future market returns and company value.Originality/valueThis study contributes to the development of top management team building and corporate governance practices. Additionally, it furnishes investors with valuable insights into assessing the risk level of companies through the characteristics of their top management teams, thereby facilitating informed investment decision-making and improving capital market resource allocation efficiency.