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Does CEO's early life experience affect corporate bond yield spread? Evidence from China's great famine

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  • Xue, Fei
  • Wang, Xin
  • Xie, Yan
  • Zhang, Weihua

Abstract

Based on imprinting theory, this study investigates whether a CEO's childhood famine experience affects the credit spread of firms' newly issued corporate bonds. Using the Great Famine setting in China, we provide evidence that firms with famine-experienced CEOs have lower bond credit spreads than firms with CEOs who have not experienced the famine. The results were robust after considering various potential endogeneity issues. Cross-sectional analyses suggest that the negative relationship between CEOs' famine experience and credit spreads is more pronounced when firms have high operating risk, are non-SOEs, and when economic policy uncertainty is high. Our study provides new empirical evidence that executives' traumatic early life experiences significantly impact their firms from the perspective of the cost of debt financing.

Suggested Citation

  • Xue, Fei & Wang, Xin & Xie, Yan & Zhang, Weihua, 2022. "Does CEO's early life experience affect corporate bond yield spread? Evidence from China's great famine," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 1012-1024.
    • Handle: RePEc:eee:reveco:v:80:y:2022:i:c:p:1012-1024
    DOI: 10.1016/j.iref.2022.03.010
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    More about this item

    Keywords

    Early famine experience; Imprinting theory; Credit spread;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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