CEO marital status and capital allocation efficiency

IF 1.8 Q2 BUSINESS, FINANCE

International Journal of Managerial Finance Pub Date : 2023-02-02 DOI:10.1108/ijmf-10-2021-0531

Md Noman Hossain, Md Nazmul Hasan Bhuyan

{"title":"CEO marital status and capital allocation efficiency","authors":"Md Noman Hossain, Md Nazmul Hasan Bhuyan","doi":"10.1108/ijmf-10-2021-0531","DOIUrl":null,"url":null,"abstract":"PurposeThe extant literature provides evidence that single CEOs are less risk-averse. Building on the theory of risk aversion, the authors argue that the risk aversion trait arising from CEO’s marital status partially explains capital allocation efficiency. The paper aims to examine the association between CEO marital status and capital allocation efficiency.Design/methodology/approachThe primary sample includes 9,671 observations from 1,264 US firms. The authors apply multivariate regression and a series of endogeneity tests to examine the association between CEO marital status and capital allocation efficiency.FindingsSingle-CEO firms have higher capital allocation inefficiency than those with married CEOs. The findings continue to hold after a series of endogeneity tests such as propensity score matching, change analysis and instrumental variable regression analysis and are robust to alternative proxies for capital allocation inefficiency. The capital allocation inefficiency in single-CEO firms arises from overinvestment but not underinvestment, and corporate risk-taking channels the effect.Research limitations/implicationsThe study is limited to the effect of CEO marital status, not CEO marital quality.Practical implicationsThe findings imply that besides information asymmetry and agency conflicts, CEO marital status should receive special attention for capital allocation efficiency. Also, marital status influences the CEOs’ commitment to the general good of society, affecting the potential conflict of interest with different stakeholders from inefficient capital allocation.Originality/valueThis study extends corporate finance literature on CEO marital status by providing novel evidence on the effect of single CEOs on capital allocation efficiency. The authors conclude that CEOs’ personality traits, such as marital status, matter in corporate policy choices.","PeriodicalId":51698,"journal":{"name":"International Journal of Managerial Finance","volume":null,"pages":null},"PeriodicalIF":1.8000,"publicationDate":"2023-02-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Managerial Finance","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/ijmf-10-2021-0531","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}

引用次数: 1

Abstract

PurposeThe extant literature provides evidence that single CEOs are less risk-averse. Building on the theory of risk aversion, the authors argue that the risk aversion trait arising from CEO’s marital status partially explains capital allocation efficiency. The paper aims to examine the association between CEO marital status and capital allocation efficiency.Design/methodology/approachThe primary sample includes 9,671 observations from 1,264 US firms. The authors apply multivariate regression and a series of endogeneity tests to examine the association between CEO marital status and capital allocation efficiency.FindingsSingle-CEO firms have higher capital allocation inefficiency than those with married CEOs. The findings continue to hold after a series of endogeneity tests such as propensity score matching, change analysis and instrumental variable regression analysis and are robust to alternative proxies for capital allocation inefficiency. The capital allocation inefficiency in single-CEO firms arises from overinvestment but not underinvestment, and corporate risk-taking channels the effect.Research limitations/implicationsThe study is limited to the effect of CEO marital status, not CEO marital quality.Practical implicationsThe findings imply that besides information asymmetry and agency conflicts, CEO marital status should receive special attention for capital allocation efficiency. Also, marital status influences the CEOs’ commitment to the general good of society, affecting the potential conflict of interest with different stakeholders from inefficient capital allocation.Originality/valueThis study extends corporate finance literature on CEO marital status by providing novel evidence on the effect of single CEOs on capital allocation efficiency. The authors conclude that CEOs’ personality traits, such as marital status, matter in corporate policy choices.

查看原文本刊更多论文

CEO婚姻状况与资本配置效率

目的现有文献提供的证据表明，单身CEO对风险的厌恶程度较低。基于风险厌恶理论，作者认为CEO婚姻状况产生的风险厌恶特征部分解释了资本配置效率。本文旨在检验CEO婚姻状况与资本配置效率之间的关系。设计/方法/方法主要样本包括来自1264家美国公司的9671项观察结果。作者采用多元回归和一系列内生性检验来检验CEO婚姻状况与资本配置效率之间的关系。发现单身CEO公司的资本配置效率高于已婚CEO公司。经过一系列内生性测试，如倾向得分匹配、变化分析和工具变量回归分析，这些发现仍然成立，并且对资本配置低效的替代指标是稳健的。单一CEO公司的资本配置效率低下是由过度投资而非投资不足引起的，而企业风险承担则是这种影响的渠道。研究局限性/含义该研究仅限于CEO婚姻状况的影响，而非CEO婚姻质量。研究结果表明，除了信息不对称和代理冲突外，CEO的婚姻状况还应受到资本配置效率的特别关注。此外，婚姻状况影响首席执行官对社会整体利益的承诺，影响低效资本配置与不同利益相关者的潜在利益冲突。独创性/价值本研究扩展了关于CEO婚姻状况的公司财务文献，为单身CEO对资本配置效率的影响提供了新的证据。作者得出结论，首席执行官的性格特征，如婚姻状况，在公司政策选择中很重要。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

International Journal of Managerial Finance BUSINESS, FINANCE-

CiteScore

4.10

自引率

0.00%

发文量

期刊介绍： Treasury and Financial Risk Management ■Redefining, measuring and identifying new methods to manage risk for financing decisions ■The role, costs and benefits of insurance and hedging financing decisions ■The role of rating agencies in managerial decisions Investment and Financing Decision Making ■The uses and applications of forecasting to examine financing decisions measurement and comparisons of various financing options ■The public versus private financing decision ■The decision of where to be publicly traded - including comparisons of market structures and exchanges ■Short term versus long term portfolio management - choice of securities (debt vs equity, convertible vs non-convertible)

文献相关原料

公司名称	产品信息	采购帮参考价格