Executive Characteristics and their Impact on Enterprise Risk Management in the Guangdong-Hong Kong-Macao Greater Bay Area: An Empirical Analysis

HRMARS - Purpose: This study investigates the impact of senior executive characteristics—including age, education, compensation, tenure, and overseas study background—on Enterprise Risk Management (ERM) implementation. Focusing on listed companies in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) from 2018 to 2023, the research leverages the Upper Echelons Theory to explore how these traits shape strategic decision-making and risk management practices. Design/methodology/approach: Employing a fixed-effects model and robustness checks for endogeneity, this study analyses data from listed companies in the GBA. The research examines the influence of senior executive characteristics on ERM practices, utilizing comprehensive quantitative analysis to ensure the validity and reliability of the findings. Findings: The analysis reveals significant correlations between senior executive characteristics and ERM implementation. Younger executives exhibit a strategic and innovative approach to risk management, viewing it as a means to achieve organizational objectives. In contrast, older executives prioritize compliance and risk avoidance, ensuring regulatory adherence and stability. Higher education levels, particularly in finance, accounting, or risk management, significantly enhance ERM practices. Executives with advanced degrees from prestigious institutions demonstrate greater familiarity with contemporary risk management frameworks and tools, facilitating the adoption of best practices. Balanced compensation aligns executives' interests with the enterprise, fostering a sense of responsibility and mission that enhances ERM practices. However, excessive compensation can lead to unethical behavior, underscoring the need for carefully structured remuneration policies. Longer tenure is associated with a deeper understanding of enterprise operations, leading to improved ERM practices. Executives with international backgrounds bring advanced knowledge, avant-garde ideas, and global networks, positively influencing ERM implementation. Research limitations/implications: The study's scope is confined to listed companies in the Guangdong-Hong Kong-Macao Greater Bay Area, which may limit the generalizability of the results. Future research should consider exploring similar impacts in different regions or industries to enhance the robustness and applicability of the findings. Practical implications: The findings provide actionable insights for corporate boards and HR departments. Recruiting younger, well-educated executives, offering balanced compensation packages, and promoting international exposure are key strategies to enhance ERM practices. These approaches can improve organizational resilience and performance, ensuring long-term sustainability. Originality/value: This study offers a novel contribution by applying the Upper Echelons Theory to the context of ERM implementation in the GBA. The research highlights the critical influence of senior executive characteristics on strategic decision-making and risk management practices, providing practical implications for enhancing ERM through targeted executive recruitment, development, and compensation strategies. The findings underscore the importance of diverse executive traits in fostering a proactive and resilient risk management culture, ultimately contributing to improved organizational performance and resilience.