CEO Traits and Firm Outcomes: Do Early Childhood Experiences Matter?

56 Pages Posted: 17 May 2019

See all articles by M. Todd Henderson

M. Todd Henderson

University of Chicago - Law School

Irena Hutton

Florida State University - College of Business

Date Written: January 8, 2018

Abstract

This paper examines the impact of early childhood characteristics of top corporate decision makers on firm policies and value. Using a unique dataset, we study the effect of CEO birth order, family size, socioeconomic status, parent occupational choices and childhood trauma, all of which have been shown to affect personality development and social capital. Overall, we find that firstborn CEOs, CEOs from families with higher socioeconomic resources and those with less childhood trauma prefer safer investment and leverage policies, which also lead to lower firm value. Socioeconomic status dominates other childhood characteristics as a determinant of firm policies. Though our analyses indicate a moderate effect of birth order, it intensifies in CEO family owned firms where family dynamics facilitate expression of personal risk taking.

Keywords: CEO Characteristics, risk preferences, social class

Suggested Citation

Henderson, M. Todd and Hutton, Irena, CEO Traits and Firm Outcomes: Do Early Childhood Experiences Matter? (January 8, 2018). Available at SSRN: https://ssrn.com/abstract=3374389 or http://dx.doi.org/10.2139/ssrn.3374389

M. Todd Henderson

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-834-4168 (Phone)
773-702-0730 (Fax)

Irena Hutton (Contact Author)

Florida State University - College of Business ( email )

821 Academic Way
Tallahassee, FL 32306-1110
United States
850.645.1520 (Phone)

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