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Living through the Great Chinese Famine: Early-Life Experiences and Managerial Decisions

Xunan Feng and Anders Johansson ()
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Xunan Feng: Southwestern University of Finance and Economics

No 2016-41, Stockholm School of Economics Asia Working Paper Series from Stockholm China Economic Research Institute, Stockholm School of Economics

Abstract: Previous studies have linked personal characteristics of business leaders to corporate decisions. We analyze if the traumatic experience of the Chinese Famine had an impact on managerial decisions. Having lived through the famine is associated with more conservative financial, investment, and cash holding policies, a lower likelihood of unethical behavior, and better firm performance during economic downturns. By exploiting the exogenous variation in local severity of the famine, we establish a causal relationship between early-life experiences and corporate policies. Our findings thus provide evidence that momentous personal experiences can have important causal effects on managerial decisions.

Keywords: Corporate decisions; Fraud; Ethics; Corporate governance; China (search for similar items in EconPapers)
JEL-codes: D03 D83 D84 G11 G31 G32 J24 (search for similar items in EconPapers)
Date: 2016-11-01
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