Childhood Exposure to Misbehavior and the Culture of Financial Misconduct

51 Pages Posted: 25 Apr 2019 Last revised: 1 May 2023

See all articles by Christopher P. Clifford

Christopher P. Clifford

University of Kentucky

Jesse A. Ellis

North Carolina State University

William Christopher Gerken

University of Kentucky - Finance

Date Written: April 30, 2023

Abstract

This paper examines the impact of childhood cultural upbringing on financial advisor misconduct using novel data on advisors' childhood addresses. We find that an advisor’s childhood location significantly predicts misconduct, with exposure to misbehavior culture during childhood playing a stronger role than exposure during adulthood. Addressing endogeneity concerns, we conduct several tests which support the notion that our results reflect cultural exposure rather than advisors' employment choices, location preferences, local conditions, family characteristics, or clientele characteristics. Our findings underscore the formative influence of culture in shaping financial advisors' personal ethics and have implications for understanding and preventing financial misconduct.

Keywords: Financial misconduct, Financial Advisors, Household Finance, Culture

JEL Classification: D18, G24, M14, R30

Suggested Citation

Clifford, Christopher P. and Ellis, Jesse A. and Gerken, William Christopher, Childhood Exposure to Misbehavior and the Culture of Financial Misconduct (April 30, 2023). Available at SSRN: https://ssrn.com/abstract=3361230 or http://dx.doi.org/10.2139/ssrn.3361230

Christopher P. Clifford (Contact Author)

University of Kentucky ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States
859-257-3850 (Phone)

Jesse A. Ellis

North Carolina State University ( email )

Poole College of Management
Campus Box 7229
Raleigh, NC 27695
United States
919-515-9670 (Phone)

William Christopher Gerken

University of Kentucky - Finance ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States

HOME PAGE: http://www.willgerken.com

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