Posted: 21 Mar 2011 Last revised: 21 Apr 2014
Date Written: December 14, 2013
Marital status can both reflect and affect individual preferences. We explore the impact of marriage on corporate CEOs, and find that firms run by single CEOs exhibit higher stock return volatility, pursue more aggressive investment policies, and do not respond to changes in idiosyncratic risk. These effects are weaker for older CEOs. Our findings continue to hold when we use variation in divorce laws across states to instrument for CEO marital status, which supports the hypothesis that marriage itself drives choices rather than it just reflecting innate heterogeneity in preferences. We explore various potential explanations for why single CEOs may be less risk-averse.
Keywords: CEOs, idiosyncratic risk, status concerns
JEL Classification: G02, G30, G32, J12, K36
Suggested Citation: Suggested Citation
Roussanov, Nikolai L. and Savor, Pavel G., Marriage and Managers’ Attitudes to Risk (December 14, 2013). AFA 2013 San Diego Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1787381 or http://dx.doi.org/10.2139/ssrn.1787381