No abstract

The literature on managerial style posits a linear relation between a chief executive officer's (CEOs) past experiences and firm risk. We show that there is a nonmonotonic relation between the intensity of CEOs’ early‐life exposure to fatal disasters and corporate risk‐taking. CEOs who experience fatal disasters without extremely negative consequences lead firms that behave more aggressively, whereas CEOs who witness the extreme downside of disasters behave more conservatively. These patterns manifest across various corporate policies including leverage, cash holdings, and acquisition activity. Ultimately, the link between CEOs’ disaster experience and corporate policies has real economic consequences on firm riskiness and cost of capital.

The literature on managerial style posits a linear relation between a CEO's past experiences and firm risk. We show that there is a non-monotonic relation between the intensity of CEOs' earlylife exposure to fatal disasters and corporate risk-taking. CEOs who experience fatal disasters without extremely negative consequences lead firms that behave more aggressively, whereas CEOs who witness the extreme downside of disasters behave more conservatively. These patterns manifest across various corporate policies including leverage, cash holdings, and acquisition activity. Ultimately, the link between CEOs' disaster experience and corporate policies has real economic consequences on firm riskiness and cost of capital.

No abstract

Deals for public targets take significant time to complete. During the interim, firm values can change substantially, inducing the parties to prefer deal renegotiation or termination. We predict the related costs will lead to increases in interim risk attenuating deal activity. We find increases in market volatility decrease subsequent deal activity, but only for public targets subject to an interim period. The effect is strongest when volatility is highest, for deals taking longer to close, and for larger targets. When possible, firms appear to shorten the interim window as risk increases. Firm-and industry-level measures of uncertainty reveal similar findings, suggesting the effect is not simply driven by an unobserved macro-level variable. We conclude interim uncertainty is an important factor in understanding the timing and intensity of merger waves.