Do managers overreact to salient risks? Evidence from hurricane strikes

• 成果类型: Article
• 署名作者: Dessaint, Olivier; Matray, Adrien
• 署名单位: University of Toronto; Princeton University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.07.002
• 发表日期: 2017
• 页码: 97-121
• 关键词: Behavioral bias; risk perception; Corporate cash holdings; Availability heuristic; risk management

摘要

We study how managers respond to hurricane events when their firms are located in the neighborhood of the disaster area. We find that the sudden shock to the perceived liquidity risk leads managers to increase corporate cash holdings and to express more concerns about hurricane risk in 10-Ks/10-Qs, even though the actual risk remains unchanged. Both effects are temporary. Over time, the perceived risk decreases, and the bias disappears. The distortion between perceived and actual risk is large, and the increase in cash is suboptimal. Overall, managerial reaction to hurricanes is consistent with salience theories of choice. (C) 2017 Elsevier B.V. All rights reserved.