Previous research demonstrates that older CEO s are associated with lower firm equity risk and fewer R&D expenditures. We examine the risk‐taking behavior of CEO s and find that not only do older CEO s invest in less R&D, they do so sub‐optimally, in the sense that CEO age distorts the effect of q on R&D investment decisions. We find that it is specifically through the channel of R&D investment that CEO age is associated with the reduction in firm equity risk. Consistent with the sub‐optimality of these distortions, firms with more effective corporate governance do not exhibit these associations.
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Chowdhury et al. (2017) studied this question.
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