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Hot-Stove Effects: The Impact of CEO Past Corporate Experiences on Dividend Policy

Author

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  • Faulkner, Matthew
  • García-Feijóo, Luis

Abstract

The personal traits of chief executive officers (CEOs) have been found to influence corporate policy decisions. We examine the impact of CEO past corporate distress experiences on payout policy. CEOs who have experienced a distress event in their career, while working in a non-CEO position at a different firm, subsequently alter corporate payout policy once in the CEO position. They are less likely to pay dividends and repurchase shares, pay out lower levels of dividends, and are less likely to increase dividends. They further exhibit preference toward repurchases. Overall, we report that experience-driven conservatism affects payout policy, a novel finding in the literature.

Suggested Citation

  • Faulkner, Matthew & García-Feijóo, Luis, 2022. "Hot-Stove Effects: The Impact of CEO Past Corporate Experiences on Dividend Policy," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 57(5), pages 1695-1726, August.
    • Handle: RePEc:cup:jfinqa:v:57:y:2022:i:5:p:1695-1726_2
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    Cited by:

    1. Park, Moon Deok & Han, Seung Hun & Song, Chanhoo, 2025. "CEO narcissism and dividend policy," Research in International Business and Finance, Elsevier, vol. 79(C).
    2. Huang, Chia-Wei & Lin, Chih-Yen, 2025. "Reductions of external director liability and corporate payout policy," International Review of Financial Analysis, Elsevier, vol. 107(C).
    3. Chung, Silver & Hwang, Daniel Sejun, 2025. "Seeing is believing: Director accounting enforcement experience and financial reporting quality," Journal of Contemporary Accounting and Economics, Elsevier, vol. 21(1).
    4. Kim, Hyeong Joon, 2025. "Lesson from stock price crash: Changes in managerial confidence and incentives," The British Accounting Review, Elsevier, vol. 57(3).
    5. Balaji, Pavithra & Qian, Cuili & Khoo, Eunice S. & Lu, Louise Y., 2025. "CEO financial distress experience and CSR: A contingency perspective," Journal of Business Research, Elsevier, vol. 199(C).
    6. Imran Ali & Farman Ali & Asif Ali & Ahmad Fraz, 2025. "Early life trauma and corporate dividend policies: evidence from China," Future Business Journal, Springer, vol. 11(1), pages 1-14, December.

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