Does early-life war exposure of a CEO enhance corporate information transparency?

Choi, Sanghak; Jung, Hail

doi:10.1016/j.jbusres.2021.07.019

Cited by 21 publications

(12 citation statements)

References 38 publications

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“…For policymakers, the conclusion of this paper suggests that they need to readjust the structure of the prospectus and adopt a structure with high semantic novelty and high content richness to submit the prospectus and reduce the IPO underpricing rate of enterprises from the perspective of semantic novelty and rich content (Grover & Bhullar, 2021 ). At the same time, enterprises are required to expand the submission of information on the transparency of corporate information in the prospectus (Choi & Jung, 2021 ). Although the willingness of IPO companies to disclose risks is gradually increasing, the phenomenon of manipulating the text of risk disclosure by whitewashing and other means still exists (Lo et al, 2017 ).…”

Section: Robustness Testmentioning

confidence: 99%

“…This paper uses an unsupervised machine learning algorithm to solve this problem. Thirdly, studies have shown that improving enterprise information transparency can increase the stock market’s liquidity (Choi & Jung, 2021 ). At the same time, the transparency of enterprise information also affects the trust of investors (Han et al, 2021 ).…”

Section: Introductionmentioning

confidence: 99%

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Cross-influence of information and risk effects on the IPO market: exploring risk disclosure with a machine learning approach

et al. 2022

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The paper examines whether the structure of the risk factor disclosure in an IPO prospectus helps explain the cross-section of first-day returns in a sample of Chinese initial public offerings. This paper analyzes the semantics and content of risk disclosure based on an unsupervised machine learning algorithm. From both long-term and short-term perspectives, this paper explores how the information effect and risk effect of risk disclosure play their respective roles. The results show that risk disclosure has a stronger risk effect at the semantic novelty level and a more substantial information effect at the risk content level. A novel aspect of the paper lies in the use of text analysis (semantic novelty and content richness) to characterize the structure of the risk factor disclosure. The study shows that initial IPO returns negatively correlate with semantic novelty and content richness. We show the interaction between risk effect and information effect on risk disclosure under the nature of the same stock plate. When enterprise information transparency is low, the impact of semantic novelty and content richness on the IPO market is respectively enhanced.

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Section: Robustness Testmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Cross-influence of information and risk effects on the IPO market: exploring risk disclosure with a machine learning approach

et al. 2022

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“…Long et al (2020) found that companies whose CEOs experienced the "Great Chinese Famine" in early life have lower stock price crash risk than those with CEOs who did not experience the famine. Using the Korean War as an exogenous shock, Choi and Jung (2021) found that firms managed by warexposed CEOs have greater information transparency than firms managed by CEOs who are not war-exposed.…”

Section: Consequences Of the Great Chinese Faminementioning

confidence: 99%

CEOs' early-life disaster experience and corporate earnings quality: Focusing on the Great Chinese Famine

Zhao¹,

Hu²

2022

Front. Psychol.

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This paper aims to examine the impact of CEOs' early-life disaster experiences on corporate earnings quality. We proxy the disaster experience with whether CEOs lived through the Great Chinese Famine and the famine intensity they experienced. The results indicate that CEOs' early-life famine experience is significantly positively associated with corporate earnings quality, and the famine effects are more obvious for CEOs who experienced the famine at adolescent ages. Further tests show that the famine experience effects are more pronounced in companies with high investor protection and cross-listing and with CEOs who have a relatively high level of education or background in economic management. The findings suggest CEOs would bear the imprint of an adverse early-life experience, which has risk aversion and learning effects on their decision making in corporate earnings information disclosure.

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“…Previous research has provided suggestive evidence that early exposure to natural disasters in childhood could lead to long-lasting cognitive, emotional, and physical impacts that may not be revealed for decades (Osofsky et al, 2015 ; Rubin et al, 2019 ). In the disaster literature, some evidence suggests that exposure to traumatic events such as war at a young age has a lasting impact on the victim’s life, even as long as five decades later (Choi & Jung, 2021 ; Kim & Lee, 2014 ). Recent findings in this line of research in business also strongly favor the long-lasting effect of natural disasters experienced by CEOs in childhood, as manifested in subsequent corporate-level decisions made later in their life (e.g., Bernile et al, 2017 ; Chen et al, 2021 ; Ru et al, 2022 ; Yao et al, 2020 ).…”

Section: Introductionmentioning

confidence: 99%

“…Exposure to traumatic events in childhood makes individuals more sensitive to the consequences of taking risks as they focus on the downside of the risk, such as fatalities, and therefore makes them more sensitized to the consequences of risk-taking and in turn implement more risk-averse and conservative corporate policies. Therefore, firms led by CEOs who experienced trauma including a natural disaster, war, or famine in early life reduce R&D investments (Chen et al, 2022 ; Ru et al, 2022 ) and increase financial information transparency (Choi & Jung, 2021 ) and quality (Yao et al, 2020 ), because they are more cautious about decisions that increase firm risk.…”

Section: Introductionmentioning

confidence: 99%

CEO’s Childhood Experience of Natural Disaster and CSR Activities

2023

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Interest in the drivers of firms’ corporate social responsibility (CSR) is growing. However, little is known about the influence of a CEO’s childhood experience of natural disasters on CSR. Using archival data, we explore this relationship by offering three mechanisms that may account for how the CEO’s childhood experience of natural disaster is related to their CSR. More specifically, while prior research has established a positive relationship based on the post-traumatic growth theory, we show that the dual mechanisms of prosocial values and a CEO’s risk aversion explain the positive relationship. We further find that the positive relationship is stronger (1) when CEOs have longer career horizons and (2) when community social capital is high. This study contributes to both research and managerial implications on the topics of CEO’s childhood experience and CSR. In particular, this study advances the upper echelon theory by revealing that a CEO’s childhood experience of natural disaster is a useful yet relatively underexplored variable that can help explain the substantial variations in firms’ CSR. Moreover, we emphasize that a CEO’s career horizons and level of community social capital are important variables that further amplify the effect of a CEO’s childhood experience of natural disaster on the firm’s CSR commitment.

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Does early-life war exposure of a CEO enhance corporate information transparency?

Cited by 21 publications

References 38 publications

Cross-influence of information and risk effects on the IPO market: exploring risk disclosure with a machine learning approach

Cross-influence of information and risk effects on the IPO market: exploring risk disclosure with a machine learning approach

CEOs' early-life disaster experience and corporate earnings quality: Focusing on the Great Chinese Famine

CEO’s Childhood Experience of Natural Disaster and CSR Activities

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