Does CEO's early life experience affect corporate bond yield spread? Evidence from China's great famine

Abstract

Based on imprinting theory, this study investigates whether a CEO's childhood famine experience affects the credit spread of firms' newly issued corporate bonds. Using the Great Famine setting in China, we provide evidence that firms with famine-experienced CEOs have lower bond credit spreads than firms with CEOs who have not experienced the famine. The results were robust after considering various potential endogeneity issues. Cross-sectional analyses suggest that the negative relationship between CEOs' famine experience and credit spreads is more pronounced when firms have high operating risk, are non-SOEs, and when economic policy uncertainty is high. Our study provides new empirical evidence that executives' traumatic early life experiences significantly impact their firms from the perspective of the cost of debt financing.