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The digital transformation, corporate uncertainty, and CEO risk preference
Xianjun Bao1, Minghui Lan2, Nan Li3
1Asia Australia Business College, Liaoning University, Shenyang, China.
Scientific Reports
|February 16, 2026
Summary
Digital transformation makes CEOs less willing to take risks by reducing company uncertainty. These effects differ based on CEO and firm characteristics, impacting executive behavior.
Area of Science:
- Business Administration
- Information Systems
- Behavioral Economics
Background:
- Digital transformation is reshaping business operations and strategic decision-making.
- Understanding the impact of technological advancements on executive behavior is crucial for organizational success.
- CEO risk preference is a key determinant of firm strategy and performance.
Purpose of the Study:
- To investigate the effect of digital transformation on CEO risk preference.
- To explore the underlying mechanisms linking digital transformation to changes in CEO risk-taking behavior.
- To examine how CEO and firm characteristics moderate this relationship.
Main Methods:
- Utilized a text-mining approach to quantify digital transformation for Chinese listed firms (2015-2023).
- Employed multiple behavioral proxies to measure CEO risk preference.
- Conducted mechanism and heterogeneity analyses to validate findings.
Main Results:
- Digital transformation significantly increases CEO risk aversion.
- Reduced firm-level uncertainty is identified as a primary mechanism driving this effect.
- The impact of digital transformation on CEO risk preference varies with CEO attributes (age, tenure, compensation, tech background) and firm characteristics.
Conclusions:
- Digital transformation not only alters organizational processes but also shapes managerial risk tendencies.
- Technological change has profound behavioral micro-foundations influencing executive decision-making.
- Findings offer novel insights into the behavioral impacts of digitalization on corporate governance.
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