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 12, 2014


Abstract:     
The extant literature on managerial style posits a linear relation between a CEO’s exposure to risk and subsequent corporate policy. We show that there is a non-monotonic relation between CEO’s early-life exposure to natural disasters and risk-taking. Specifically, experiencing natural disasters without extremely negative consequences appears to desensitize CEOs to the negative consequences of risk. However, if a CEO was exposed to "extreme" levels of fatal disasters and experienced the downside potential of risky situations, he or she appears to be more cautious in their approach to risk when at the helm of a firm. These results hold across various corporate policies and outcomes including leverage, stock volatility, cash holdings, acquisitiveness, and CEO compensation structure.

Number of Pages in PDF File: 50

Keywords: CEO behavior, Risk-taking, Formative experiences, Managerial Style

JEL Classification: G30, G32

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Date posted: April 11, 2014 ; Last revised: May 13, 2014

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 12, 2014). 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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