The Impact of CEOs’ Incentives and Experience on Corporate Credit Risk
The objective of this paper is to comprehensively understand how CEOs’ risk preference, proxied by their
incentives, gender, age, power, and experience affect firm credit risk. We find that more debt-based compensation is
associated with lower firm credit risk. CEOs having more equity-based compensation can level up firm credit risk except in
the financial crisis period. Moreover, CEOs’ experience is beneficial for firm credit quality only during the financial crisis.
To sum up, CEOs’ incentives and experience matter to corporate credit risk particularly during the financial crisis.