Status, Marriage, and Managers' Attitudes to Risk

54 Pages Posted: 10 Mar 2012 Last revised: 27 Oct 2014

See all articles by Nikolai L. Roussanov

Nikolai L. Roussanov

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Pavel G. Savor

DePaul University - Kellstadt Graduate School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: March 2012

Abstract

Status concerns can drive risk-taking behavior by affecting the payoff to a marginal dollar of wealth. If status concerns arise endogenously due to competition in the marriage market, then unmarried individuals should take greater risks. We test this hypothesis by studying corporate CEOs. We find that single CEOs are associated with firms exhibiting higher stock return volatility, pursue more aggressive investment policies, and are not affected by increases in idiosyncratic risk. These effects are weaker for older CEOs. Our results also hold when we use variation in divorce laws across states to instrument for CEO marital status.

Suggested Citation

Roussanov, Nikolai L. and Savor, Pavel G., Status, Marriage, and Managers' Attitudes to Risk (March 2012). NBER Working Paper No. w17904, Available at SSRN: https://ssrn.com/abstract=2019401

Nikolai L. Roussanov (Contact Author)

University of Pennsylvania - The Wharton School ( email )

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National Bureau of Economic Research (NBER)

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Pavel G. Savor

DePaul University - Kellstadt Graduate School of Business ( email )

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Chicago, IL
United States

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