THE MEDIATING EFFECT OF FIRM RISK ON THE RELATIONSHIP BETWEEN CEO TENURE AND FIRM PERFORMANCE
Keywords:
CEO tenure, Firm risk, Firm performance, MediatorAbstract
Objectives of this research are (1) to study the relationship between the CEO Tenure and firm performance of listed firm on the Stock Exchange of Thailand and Market for Alternative Investment. (2) to study the mediator influence of firm risks on the relationship between CEO tenure and firm performance. Statistical method conduced in this research consists of (1) the descriptive statistics and (2) the analyzed statistics of structural equation model (SEM) via SPSS program. The research found that (1) It is a direct relationship between CEO tenure and firm performance and CEO tenure has significant positive association with the performance at 0.01 level. This output is consistent with the Stewardship Theory, explaining that management acts as a steward to protect the organization's interests rather than personal interests. (2) a study of indirect relationship between CEO tenure and firm performance using firm risk as a mediator variable. The results of the structural equation model analysis showed that firm risk is a partial mediator. The impact of firm risk causes the relationship between CEO tenure and firm performance declined. But this relationship is still significant at the 0.01 level. The mediator effect of firm risk can be used to reveal the complex relationship between variables. The results showed that CEO tenure is significantly negative to firm risk at 0.01 level. This is consistent with the Agency Theory. This theory explains that management is unwilling to invest in risky but high-yield projects because the wrong investment may have an impact on the job position. In addition, the results showed that the firm risk was significantly negative to the firm performance at 0.01 level. It indicates that the greater the risk, the more negative the firm performance.
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