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“I Do”: Does Marital Status Affect How Much CEOs “Do”?

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  • Gina Nicolosi
  • Adam S. Yore

Abstract

This paper explores whether a CEO's marital status reveals unobservable risk preferences which influence their firm's investment and compensation policies. Using biographical data for CEOs of large domestic companies, we find that corporate deal-making activity (e.g., mergers, joint ventures, major capital expenditures, etc.) and overall firm riskiness both increase significantly with personal life restructuring (e.g., marriages and divorces). This relation is supported by an instrumental variables analysis and also an investigation surrounding CEO turnover. Finally, the link between a CEO's marital status and preference for option-based compensation further suggests that personal restructuring may be an indicator of executive risk appetites.

Suggested Citation

  • Gina Nicolosi & Adam S. Yore, 2015. "“I Do”: Does Marital Status Affect How Much CEOs “Do”?," The Financial Review, Eastern Finance Association, vol. 50(1), pages 57-88, January.
    • Handle: RePEc:bla:finrev:v:50:y:2015:i:1:p:57-88
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    File URL: http://hdl.handle.net/10.1111/fire.12060
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    Citations

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    Cited by:

    1. Dev R. Mishra, 2021. "Charitable inclination and the chief executive officer's pay package," The Financial Review, Eastern Finance Association, vol. 56(1), pages 85-108, February.
    2. Yao, Haitang & Liu, Wei & Wu, Chia-Huei & Yuan, Yu-Hsi, 2022. "The imprinting effect of SARS experience on the fear of COVID-19: The role of AI and big data," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    3. Kim, Jeong-Bon & Liao, Shushu & Liu, Yangke, 2021. "Married CEOs and Stock Price Crash Risk," QBS Working Paper Series 2021/09, Queen's University Belfast, Queen's Business School.
    4. Christopher S. Reina & Suzanne J. Peterson & Zhen Zhang, 2017. "Adverse Effects of CEO Family-to-Work Conflict on Firm Performance," Organization Science, INFORMS, vol. 28(2), pages 228-243, April.
    5. Ming-Hua Liu & Shaohua Tian & Yang Zhang, 2023. "CEO marital status and corporate tax planning behavior," Review of Quantitative Finance and Accounting, Springer, vol. 61(4), pages 1207-1242, November.
    6. Neyland, Jordan, 2020. "Love or money: The effect of CEO divorce on firm risk and compensation," Journal of Corporate Finance, Elsevier, vol. 60(C).
    7. Xu, Xixiong & Lin, Cuiliang & Wang, Maochuan, 2024. "Does parenting daughters increase corporate cash dividends? Evidence from Chinese family firms," Journal of Behavioral and Experimental Finance, Elsevier, vol. 41(C).
    8. Zhao, Weijia & Cui, Xin & Wang, Chunfeng & Wu, Ji (George) & He, Feng, 2022. "Couple-based leadership and default risk: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 439-463.

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