CEO Personal Risk-Taking and Corporate Policies
- 1 January 2012
- preprint
- Published by Elsevier BV in SSRN Electronic Journal
Abstract
This study analyzes the relation between CEO personal risk-taking, managerial risk-taking and total firm risk. We find evidence that CEOs who possess private pilot’s licenses, our proxy for personal risk-taking, are associated with riskier firms. Firms led by CEO pilots have higher equity return volatility, even beyond the amount explained by a wealth effect related to compensation structure. We trace the source of the elevated firm risk to specific corporate policies including leverage and acquisition activity. Our results suggest that non-pecuniary risk preferences revealed outside the scope of the firm have implications for project selection and various corporate policies.This publication has 34 references indexed in Scilit:
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