Journal
MANAGEMENT SCIENCE
Volume 60, Issue 10, Pages 2496-2508Publisher
INFORMS
DOI: 10.1287/mnsc.2014.1926
Keywords
marriage; risk; CEO; investment; volatility; divorce
Funding
- Rodney L. White Center
- Terker Family Fellowship
- Iwanowski Family Fellowship
- Wharton Sports Business Initiative
- Wharton Entrepreneurship and Family Business Research Center @ CERT
- Centre of Excellence for Applied Research and Training (CERT) Term Fund
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Marital status can both reflect and affect individual preferences. We explore the impact of marriage on corporate chief executive officers (CEOs) and find that firms run by single CEOs exhibit higher stock return volatility, pursue more aggressive investment policies, and do not respond to changes in idiosyncratic risk. These effects are weaker for older CEOs. Our findings continue to hold when we use variation in divorce laws across states to instrument for CEO marital status, which supports the hypothesis that marriage itself drives choices rather than it just reflecting innate heterogeneity in preferences. We explore various potential explanations for why single CEOs may be less risk averse. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.1926.
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