Abstract
We propose and test whether adverse life events experienced by CEOs are associated with firms' stock price crash risk. Based on a large sample of Chinese companies from 2000 to 2015, we find evidence 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. Further, the negative association between famine experience and crash risk is more pronounced for firms whose CEOs have greater decision-making powers and for non-State-owned enterprises. We also find direct links between famine experience and various factors that have already been documented as determinants of crash risk. Our results support behavior economics theory on imprinting: CEO memories of adverse life experiences have an indelible effect on their decision-making processes, which in turn influence how the financial information is provided and disclosed to the stock market.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
