CEO experience and firm risk-taking over business life cycle

Purpose This study aims to investigate how chief executive officer (CEO) characteristics, particularly managerial experience, affect the risk-taking behavior of listed firms in Vietnam. Design/methodology/approach Using a sample of 514 publicly listed firms from 2010 to 2021, the authors examine how corporate risk-taking measured by stock return volatility and idiosyncratic risk responds to CEO age, tenure and board experience. Findings The results indicate that CEO experience is inversely associated with corporate risk-taking. This effect is found consistently over different stages of business life cycle. Interestingly, highly educated CEOs are associated with lower levels of firm risk-taking during the decline stage. Research limitations/implications The findings support stewardship theory and underscore the importance of appointing highly experienced CEOs such as those with life, board and positional experience. Practical implications This study suggests that more experienced CEOs are associated with lower risk-taking, highlighting the importance of experience in CEO selection and succession planning. Firms operating in highly-uncertain environments or requiring greater risk control may benefit from prioritizing experienced CEOs to enhance stability. Originality/value This study extends the literature of corporate governance by contributing the evidence of the potential negative impact of CEO experience and CEO education on firm risk-taking.