Does CEOs' early-life experience of the Great Chinese Famine always benefit stakeholders? The case of trade credit

Chengai Li, Lin Pan and Kam C. Chan

Finance Research Letters, 2023, vol. 51, issue C

Abstract: We examine the impact of CEOs’ traumatic experiences on trade credit policy. Specifically, we follow an emerging body of literature that uses the Great Chinese Famine as the traumatic experience. Our findings suggest that such experiences make CEOs tighten trade credit of their firms relative to those without such experiences. In addition, we show that firms with Famine CEOs exhibit smaller Tobin's Q and weaker buy-and-hold returns than those without Famine CEOs. While CEOs’ traumatic experiences make them conservatively manage their firms, decisions that solely depend on childhood traumatic experiences are suboptimal; thus, they do not help improve firm value.

Keywords: CEO early life experience; Trade credit; Suboptimal decisions; Firm value (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322006353

DOI: 10.1016/j.frl.2022.103459

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