Abstract

http://ssrn.com/abstract=2423044
 


 



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


Gennaro Bernile


Singapore Management University - Lee Kong Chian School of Business

Vineet Bhagwat


University of Oregon

P. Raghavendra Rau


University of Cambridge

September 1, 2015


Abstract:     
The literature on managerial style posits a linear relation between a CEO’s past experiences and firm risk. We show that there is a non-monotonic 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.

Number of Pages in PDF File: 80

Keywords: CEO Formative Experiences, CEO Behavior, Risk-taking, Managerial Style

JEL Classification: G30, G32, G39


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Date posted: April 11, 2014 ; Last revised: October 1, 2015

Suggested Citation

Bernile, Gennaro and Bhagwat, Vineet and Rau, P. Raghavendra, What Doesn't Kill You Will Only Make You More Risk-Loving: Early-Life Disasters and CEO Behavior (September 1, 2015). Available at SSRN: http://ssrn.com/abstract=2423044 or http://dx.doi.org/10.2139/ssrn.2423044

Contact Information

Gennaro Bernile
Singapore Management University - Lee Kong Chian School of Business ( email )
50 Stamford Road
Level 4
Singapore, 178899
Singapore
+65-68085478 (Phone)

Vineet Bhagwat (Contact Author)
University of Oregon ( email )
Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States
P. Raghavendra Rau
University of Cambridge ( email )
Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)
HOME PAGE: http://www.raghurau.com/
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