Early-Life Experience and CEOs' Reactions to COVID-19

59 Pages Posted: 26 Aug 2022 Last revised: 8 Feb 2024

See all articles by Hong Ru

Hong Ru

Nanyang Business School, Nanyang Technological University

Endong Yang

Faculty of Business Administration, University of Macau

Kunru Zou

Hong Kong Baptist University

Date Written: August 02, 2024

Abstract

This study investigates how CEOs’ experience of natural disasters and severe disease outbreaks in their formative years influences their firms’ responses to the COVID-19 pandemic in the United States. We observe that firms whose CEOs experienced disease outbreaks akin to COVID-19 early in their lives demonstrated more conservative responses to the emergence of the COVID-19 in late February 2020, notably through a substantial slowdown in capital expenditure growth. Moreover, firms led by CEOs with early-life disease experience exhibit a more negative tone in their corporate disclosures and heightened pessimism in their earnings forecasts following the COVID-19 outbreak. These effects are more pronounced for firms in industries that were hit hard by the pandemic. Our findings suggest that severe events early in life leave indelible imprints on memory, thereby impacting CEOs’ decision-making when managing similar crises in their professional careers.

Keywords: Early-Life Experience, Corporate Disclosure, Management Style, COVID-19

JEL Classification: G30, G31, G32, D83, M41, I10

Suggested Citation

Ru, Hong and Yang, Endong and Zou, Kunru, Early-Life Experience and CEOs' Reactions to COVID-19 (August 02, 2024). Forthcoming, Journal of Accounting and Economics, Available at SSRN: https://ssrn.com/abstract=4199775 or http://dx.doi.org/10.2139/ssrn.4199775

Hong Ru (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore
(+65) 67904661 (Phone)

HOME PAGE: http://https://hongru.mit.edu/

Endong Yang

Faculty of Business Administration, University of Macau ( email )

Macau

Kunru Zou

Hong Kong Baptist University ( email )

Renfrew Road 34
Kowloon Tong
Hong Kong

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