Risk-Relevant Early Life Experiences and Individual Trading Activity

Early Life Suffering Experience from Great Famine on Firm Charity, Agency Costs, and Corporate Governance

“…The results show that famine-experienced CEOs have a higher level of cash sensitivity, and are more likely to retain cash immediately through operation (Feng & Johansson, 2018;Hu et al, 2019). By studying the trading behavior of participants in a simulated asset market, the researchers found that a trader's experience with a major family financial loss during childhood has an impact on their willingness to trade (Cheong et al, 2020). These prior studies show that early-life experiences can have an important influence on present decision-making.…”

“…Recently, there has been a growing number of research on the effects of the famine experiences. The individual's memory of the Great Chinese Famine can exist for a long time, and the experience of this period of severe material shortage makes people different from those without this experience in some aspects (Cheong et al, 2020;Deng et al, 2019;Feng & Johansson, 2018;Gooch, 2017;Hu et al, 2019;Long et al, 2020;Zhang, 2017). The studies find that CEOs who experienced the intense famines during their childhood are more risk averse (Zhang, 2017).…”