What Doesn't Kill You Will Only Make You More Risk-Loving: Early-Life Disasters and CEO Behavior

  • Bernile G
  • Bhagwat V
  • Rau P
  • 201

    Readers

    Mendeley users who have this article in their library.
  • 13

    Citations

    Citations of this article.

Abstract

The literature on managerial style posits a linear relation between a CEO's past experiences and firm risk. We show that there is a nonmonotonic relation between the intensity of CEOs’ early-life exposure to fatal disasters and corporate risk-taking. CEOs who experience fatal disasters without extremely negative consequences lead firms that behave more aggressively, whereas CEOs who witness the extreme downside of disasters behave more conservatively. These patterns manifest across various corporate policies including leverage, cash holdings, and acquisition activity. Ultimately, the link between CEOs’ disaster experience and corporate policies has real economic consequences on firm riskiness and cost of capital. This article is protected by copyright. All rights reserved

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Authors

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free