Knowledge that Transforms

Firms led by older CEOs invest less, but the mechanism behind this age–investment gradient remains unclear. We study how CEO age shapes investment evaluation by eliciting CEOs' ratings of a project's investment attractiveness in a large-scale scenario-based experiment with more than 3700 CEOs from owner-managed Danish firms. Our design provides direct evidence on CEOs' investment evaluations by separating baseline differences in investment attractiveness from sensitivity to risk moments and payout horizon. Each CEO evaluates randomized capital-budgeting scenarios relative to the status quo, allowing us to distinguish a baseline shift in willingness to view projects as compelling from age differences in responsiveness to risk characteristics and payout horizon. We document a pronounced negative association between CEO age and investment attractiveness. Holding expected IRR, variance, skewness, and payout horizon constant, CEOs aged 60 or older rate the same opportunities as less attractive, while age differences in sensitivity to these attributes are weak. Standard stated risk attitudes and a lottery measure show no systematic age pattern. For external validity, we construct a CEO-specific inaction propensity from the experiment—the residual tendency to rate otherwise identical projects as less attractive after accounting for project characteristics—and show that it predicts lower investment in administrative data. Including this measure attenuates the reduced-form age–investment association, suggesting that age-related investment declines are not readily explained by conventional risk preferences or investment horizons alone, but also reflect a broader residual tendency towards lower investment propensity.

Despite widespread optimism among regulators and market practitioners about corporate asset-backed securitization (ABS), its relationship with firm performance remains unclear. This study examines the association between corporate ABS and firm performance in China using a novel look-through approach to identify actual originators of ABS transactions. We document an inverted U-shaped relationship between corporate ABS scale and firm performance. Firm performance is positively associated with ABS issuance at low-to-moderate levels, but this association turns negative when issuance becomes excessive. Heterogeneity analyses show that this nonlinear relationship varies across ownership types and firm sizes and is more pronounced among non-state-owned and larger firms. Multiple analyses suggest that corporate ABS issuance in China functions less as pure risk transfer and more as debt-like financing, and the leverage-channel analysis further provides corroborative evidence that leverage helps explain the inverted U-shaped relationship between ABS issuance and firm performance. These findings advance our understanding of the relationship between corporate ABS and firm performance in China and offer practical implications for firms and regulators.