War-experienced CEOs and corporate policies: Evidence from the Korean war

Choi, Sanghak; Jung, Hail; Kim, Daejin

doi:10.1016/j.ememar.2020.100790

Cited by 4 publications

(2 citation statements)

References 51 publications

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“…Conversely, CEOs who witnessed the extreme downside potential of natural disasters behave more conservatively when at the helm of a firm ( Bernile et al, 2017 ). CEOs exposed to the war in their early-life tend to be conservative in corporate policies, especially those who have witnessed large-scale massacres ( Choi et al, 2020 ). Scholars have focused traumatic events on the Great Famine in China from 1959 to 1961.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…Everyone belongs to a specific peer group; that is, the human group born in the same era and region. Many major social events, such as wars, economic depression, famines, epidemics and natural disaster have similar effects on the members of a particular peer group ( Cheng and Zhang, 2011 ; Malmendier et al, 2011 ; Cameron and Shah, 2015 ; Bernile et al, 2017 ; Cassar et al, 2017 ; Feng and Johansson, 2018 ; Choi et al, 2020 ). Psychologists define this influence effect as cohort effect, which considers that similar age groups show similar personality and behavior characteristics due to similar experience and social environment.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Aftershock: CEO Great Famine Experience and Stock Price Crash Risk

et al. 2021

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This study examines the effect of CEOs’ early-life traumatic experience on firm-specific stock price crash risk. Drawing on the idea of natural experiments, we take the Great Famine in China as an external traumatic event which cannot be selected or controlled by human. The analysis points out that compensation psychology and irrational defense psychology after the trauma of Great Famine are important factors that cause CEOs to hoard bad news. Based on a large sample of Chinese companies from 2007 to 2017, we find evidence that CEOs who experienced the Great Famine during early-life tend to hoard bad news, which result in higher stock price crash risk. The more severe and prolonged the Great Famine that the CEOs experienced, the greater the effect of this traumatic experience. CEOs decision-making power enhances the adverse effect of CEOs’ early-life traumatic experiences on crash risk. Findings of this study contributes to the literature by providing a new explanation for the stock price crash risk, which is of great significance for the sustained and healthy development of capital markets.

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Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%