Impact from a distance: Emotionally attached-place disasters and corporate risk-taking

Xing Chen, Huang, Zhijian (James), Zhuo Li and Fenghua Wen

Journal of Corporate Finance, 2025, vol. 93, issue C

Abstract: Prior literature examines the impact of geographically close natural disasters on top executives' risk perceptions. Using Chinese data, this study investigates how corporate risk-taking is influenced by psychologically close disasters, which may be geographically distant. Specifically, we focus on major natural disasters that occur in places emotionally attached to CEOs or chairmen, including their hometowns and college locations. We show that top executives increase corporate risk-taking, manifested in higher return volatility and riskier corporate policies, following disasters in their geographically distant places of attachment, while no such effect is observed for close places of attachment. This effect continues into the next four to eight quarters. The increase in risk-taking is amplified when the disaster event is more salient and when the executive has a stronger connection to their distant attached places, and it is weaker for executives with better emotional resilience. Collectively, our study sheds additional light on the important role of affective connections in corporate risk decisions.

Keywords: Place attachment; Risk-taking; Natural disaster; Corporate policy (search for similar items in EconPapers)
JEL-codes: G32 G34 G4 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0929119925000665
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:93:y:2025:i:c:s0929119925000665

DOI: 10.1016/j.jcorpfin.2025.102798

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().