The Impact of Managers’ Relative Performance on Future Corporate Risk-Taking: The Moderating Role of CEO Power

Articles in Press

Document Type : Research Paper

Authors

Department of Accounting, Faculty of Management and Financial Sciences, Khatam University, Tehran, Iran.

10.22103/jak.2026.25906.4225

Abstract

Objective: The present study investigates the impact of CEOs’ relative performance evaluation on corporate risk-taking, with a particular focus on the moderating role of CEO power, in the context of companies listed on the Tehran Stock Exchange.
 
Method: This study is applied in terms of objective, and given the retrospective nature of the data, it can be classified as post-event research. From the perspective of nature and methodology, it is descriptive–correlational. To test the research hypotheses, the required data were extracted from the audited financial statements of firms listed on the Tehran Stock Exchange over the period 2012–2024 using Rahavard Novin software and the Codal database. A multiple linear regression model was employed for the statistical analysis.
 
Results: The results of the first hypothesis test indicate a significant relationship between relative performance evaluation and corporate risk-taking. The results of the second hypothesis test reveal that CEO power weakens the relationship between relative performance evaluation and risk-taking.
 
Conclusion: The analysis indicates that the evaluation of CEO performance during the first half of their tenure significantly influences their behavior in the second half. Companies whose CEOs perform poorly compared to their peers in interim evaluations tend to increase their level of risk-taking in subsequent evaluation periods. Conversely, CEOs with longer tenure, higher levels of education, and concurrent membership on the board of directors are more inclined to adopt lower-risk strategies. This suggests that managerial power can moderate the impact of relative performance evaluation on corporate risk-taking. In other words, while relative performance evaluation may encourage risk-taking and motivate managers to pursue high-risk strategies, managerial characteristics play a critical role in shaping organizational decision-making.

Keywords

Main Subjects

References

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Journal of Accounting Knowledge

Articles in Press, Accepted Manuscript
Available Online from 25 May 2026

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  • Receive Date: 11 September 2025
  • Revise Date: 17 January 2026
  • Accept Date: 15 February 2026

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