What Doesn't Kill You Will Only Make You More Risk-Loving: Early-Life Disasters and CEO Behavior

• 成果类型: Article
• 署名作者: Bernile, Gennaro; Bhagwat, Vineet; Rau, P. Raghavendra
• 署名单位: Singapore Management University; University of Oregon; University of Cambridge
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12432
• 发表日期: 2017
• 页码: 167-206
• 关键词: posttraumatic-stress-disorder; CORPORATE-POLICIES; capital structure; Managers; trauma; overconfidence; experiences; DEPRESSION; SURVIVORS; GROWTH

摘要

The literature on managerial style posits a linear relation between a chief executive officer's (CEOs) past experiences and firm risk. We show that there is a nonmonotonic relation between the intensity of CEOs' early-life exposure to fatal disasters and corporate risk-taking. CEOs who experience fatal disasters without extremely negative consequences lead firms that behave more aggressively, whereas CEOs who witness the extreme downside of disasters behave more conservatively. These patterns manifest across various corporate policies including leverage, cash holdings, and acquisition activity. Ultimately, the link between CEOs' disaster experience and corporate policies has real economic consequences on firm riskiness and cost of capital.