The ascension of executives' tenure, corporate risk-taking and corporate performance: evidence from Malaysia
Asia-Pacific Journal of Business Administration
ISSN: 1757-4323
Article publication date: 30 August 2021
Issue publication date: 3 January 2022
Abstract
Purpose
This study aims to investigate the implication of top executives’ number of years of experience (tenure) on corporate risk-taking behaviour and corporate performance in Malaysian corporations.
Design/methodology/approach
To test the hypothesis efficiently, the authors have extracted the data from Bloomberg for 788 listed companies of the Malaysian Stock Exchange. The methodology entails ordinary least squares regressions, quantile regression and dynamic system generalized method of moments model.
Findings
First, the authors show that executive management tenure has a significant negative relationship with corporate risk-taking. It means that the long-tenured executives tend to undertake less risky strategies and decisions. Second, this study reveals that the longer executive management tenure has a positive relationship with corporate performance. Third, the moderating effect of corporate risk-taking with executive tenure (Tenure dummy*Risk) has a negative relationship with the corporate performance by 1%.
Practical implications
It implies that the appointment of experienced executive management contributes towards corporate performance directly. However, experienced management trends take less risk, which eventually results in mitigating the corporate performance. On that basis, the findings are significant in highlighting the usefulness of executive leadership term and offers insights to academics, practitioners and policymakers.
Originality/value
This paper is novel since it is unique in evaluating the executive tenure and the preferences to handle risk strategies and how that impact the firm performance.
Keywords
Acknowledgements
The authors would like to thank the editor in chief Associate Prof. Dr Saeed Pahlevansharif and Associate editor Dr. Navaz Naghavi, Facutly of Business and Law, Taylor's University – Malaysia for considering our paper for publication in Asia-Pacific Journal of Business Administration. The authors would also like to thank two anonymous reviewers for their valuable comments.
Citation
Atayah, O.F., Najaf, K., Subramaniam, R.K. and Chin, P.N. (2022), "The ascension of executives' tenure, corporate risk-taking and corporate performance: evidence from Malaysia", Asia-Pacific Journal of Business Administration, Vol. 14 No. 1, pp. 101-123. https://doi.org/10.1108/APJBA-05-2021-0189
Publisher
:Emerald Publishing Limited
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