Download this Paper Open PDF in Browser

CEO Social Status and Risk-Taking

41 Pages Posted: 26 Sep 2010 Last revised: 25 Sep 2016

Joshua Shemesh

Monash University - Department of Banking and Finance; Financial Research Network (FIRN)

Date Written: August 15, 2016

Abstract

I examine whether changes in CEO status affect risk-related business decisions. I use prestigious awards as shocks to CEO status relative to other CEOs. Firms with award-winning CEOs decrease their idiosyncratic volatility, and their industry betas converge towards one. These firms also reduce their spending on research and development, while increasing investment in fixed assets relative to a matched sample of firms with non-winning CEOs. The evidence suggests that CEOs who reach higher status become more concerned about poor relative performance. By conforming to other firms in their industry, CEOs with the highest reputation can lock-in their relative advantage.

Keywords: Managerial Risk Taking, Relative Concerns, Reputation

JEL Classification: G30, G32

Suggested Citation

Shemesh, Joshua, CEO Social Status and Risk-Taking (August 15, 2016). Available at SSRN: https://ssrn.com/abstract=1682625 or http://dx.doi.org/10.2139/ssrn.1682625

Joshua Shemesh (Contact Author)

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Paper statistics

Downloads
607
Rank
35,721
Abstract Views
2,216