The Impact of CEO Competence Heterogeneity and Investor Risk Appetite on Corporate Bond Yield- Take the Listed Companies of the Real Estate Industry as an Example

The purpose of this paper is to propose a new integrated model that combines the concepts of risk and CEO competence. Risk is the deviation of the result caused by the different effects. Putting risk into the real capital market due to information asymmetry and imperfect capital market, investors must bear the investment-oriented risk while pursuing excess remuneration. The Chief Executive Officer (CEO), the core decision maker, plays an important role in corporate bond yields, but the impact of CEO competence heterogeneity on corporate bond yield performance indicates rarely noticeable. A structural equation model and five-way interactions in moderated multiple regressions was used to test the hypotheses on a sample of 215 bond yields issued by 43 A-share listed companies in SSE and SZSE as a research sample in 2007-2017, and collected 473 sample data for 11 years in China. This results indicate that five indicators of the company’s return on assets ROA, CEO relative salary, CEO education, CEO qualification and CEO holdings to measure the heterogeneity of CEO competence along with the exploring of impact on corporate bond yields. It also considers the investor risk appetite factor and considers the macro factor GDP as the influencing factor to investigate the impact of investors as risk enthusiasts or risk aversion on corporate bond yields. The present study conceptualized the two influencing factors of CEO competence heterogeneity and investor risk preference, it is expected to explore the impact of corporate bond yield. The study concluded that the company’s return on assets ROA, CEO relative salary, CEO education, CEO holdings and investor risk premium will exert a significant impact on corporate bond yields. CEO qualifications and GDP make no significant impact on corporate bond yields. To the best of the knowledge, how A-share listed companies identify CEO competence heterogeneity to create organization performance, thereby promoting the development of risk and CEO competence heterogeneity of China has not been analysed in financial literature. Thus, the present study provides a significant contribution to the human capital literature, in which empirical research analyses the five-way interaction and demonstrates the empirical insights that may be used to study human capital. The findings reported in this study will encourage future researchers to employ heterogeneity human capital perspective.