What effect does CEO age have on corporate decisions? - A comparable study of private and public Swedish firms over the years 1997-2013

Abstract: The purpose of this paper is to examine, within a Swedish context, whether there are systematic effects related to CEO age and how they affect decision-making. The paper examines the financial leverage, operating leverage, cash-to-asset ratio and quick ratio on all Swedish limited companies. It also investigates whether the effect of CEO age on corporate policies depend on if a company is listed or not. Previous studies on US firms suggest that younger CEOs tend to make riskier decisions and there are different theories provided. Personal characteristics that changes with age and considerations for the future career are potential reasons for observed behavioral biases. The results in this thesis show the opposite relationship to previous studies and indicate that young CEOs in public firms tend to be more risk-avert than older CEOs. However, in private firms, young CEOs have riskier corporate policies in line with previous theories. We conclude that CEO age does have an effect on corporate policies and that the ownership structure is important for this relationship because of career concerns.