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

May 2015

Asian Finance Association (AsianFA) 2015 Conference Paper

Abstract:     
The extant literature on managerial style posits a linear relation between a CEO’s past experiences and corporate policy. We show that there is a non-monotonic relation between the intensity of CEOs’ early-life exposure to fatal natural disasters and subsequent corporate risk-taking. CEOs who experience fatal disasters without extremely negative consequences appear to be desensitized to risk and lead firms that behave more aggressively. Conversely, CEOs who witnessed the extreme downside potential of fatal disasters behave more conservatively when at the helm of a firm. These results hold across various corporate policies and outcomes including leverage, stock volatility, cash holdings, and acquisitiveness.

Number of Pages in PDF File: 62

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

JEL Classification: G30, G32, G39


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Date posted: April 11, 2014 ; Last revised: July 30, 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 (May 2015). Asian Finance Association (AsianFA) 2015 Conference Paper. 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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