Pilot CEOs and Corporate Cash Holdings

46 Pages Posted: 30 Jul 2018

See all articles by Lili Chen

Lili Chen

Australian National University (ANU) - College of Business and Economics

Lingwei Li

Australian National University (ANU)

Marvin Wee

Australian National University (ANU); Financial Research Network (FIRN)

Date Written: July 27, 2018

Abstract

We examine the effect of situation awareness developed from aviation training and experiences on corporate cash policies. We find that firms led by pilot CEOs are more likely to have higher cash holdings and higher market value of cash holdings. The findings suggest that pilot CEOs have greater situation awareness, and that these CEOs are more likely to plan ahead to cope with future liquidity needs. In additional tests, we find the level of pilot certification is associated with corporate cash holdings and the value of cash holdings. These findings provide further evidence that situation awareness can be developed through training and aviation experience. We also find that the effect of pilot CEOs on corporate cash holdings is more pronounced for firms with high growth opportunities and firms with financial constraints. These results indicate that pilot CEOs tend to hold more cash when they are aware of future opportunities and risks.

Keywords: CEOs, Situation awareness, Cash holdings, Corporate policies, Past experiences, Managerial styles

JEL Classification: G32

Suggested Citation

Chen, Lili and Li, Lingwei and Wee, Marvin, Pilot CEOs and Corporate Cash Holdings (July 27, 2018). 31st Australasian Finance and Banking Conference 2018, Available at SSRN: https://ssrn.com/abstract=3222057 or http://dx.doi.org/10.2139/ssrn.3222057

Lili Chen

Australian National University (ANU) - College of Business and Economics ( email )

Canberra
Australia

Lingwei Li

Australian National University (ANU) ( email )

College of Business and Economics
Canberra, Australian Capital Territory 2601
Australia
+61 2 612 51887 (Phone)

Marvin Wee (Contact Author)

Australian National University (ANU) ( email )

The Australian National University
College of Business and Economics
Canberra, 2601
Australia
+61 2 61250416 (Phone)

Financial Research Network (FIRN)

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

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

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