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Military CEOs

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  • Benmelech, Efraim
  • Frydman, Carola

Abstract

There is mounting evidence of the influence of personal characteristics of chief executive officers (CEOs) on corporate outcomes. In this paper we analyze the relation between military service of CEOs and managerial decisions, financial policies, and corporate outcomes. Exploiting exogenous variation in the propensity to serve in the military, we show that military service is associated with conservative corporate policies and ethical behavior. Military CEOs pursue lower corporate investment, are less likely to be involved in corporate fraudulent activity, and perform better during industry downturns. Taken together, our results show that military service has significant explanatory power for managerial decisions and firm outcomes.

Suggested Citation

  • Benmelech, Efraim & Frydman, Carola, 2015. "Military CEOs," Journal of Financial Economics, Elsevier, vol. 117(1), pages 43-59.
    • Handle: RePEc:eee:jfinec:v:117:y:2015:i:1:p:43-59
    DOI: 10.1016/j.jfineco.2014.04.009
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    3. Yi Fan, 2017. "Does Adversity Affect Long-Term Consumption and Financial Behaviour? Evidence from China's Rustication Programme," ERES eres2017_148, European Real Estate Society (ERES).
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    6. Feng, Xunan & Johansson, Anders C., 2018. "Living through the Great Chinese Famine: Early-life experiences and managerial decisions," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 638-657.
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    8. Limbach, Peter & Sonnenburg, Florian, 2014. "CEO fitness and firm value," CFR Working Papers 14-12 [rev.], University of Cologne, Centre for Financial Research (CFR).
    9. Kelvin K. F. Law & Lillian F. Mills, 2017. "Military experience and corporate tax avoidance," Review of Accounting Studies, Springer, vol. 22(1), pages 141-184, March.
    10. Adams, Renée & Keloharju, Matti & Knüpfer, Samuli, 2018. "Are CEOs born leaders? Lessons from traits of a million individuals," Journal of Financial Economics, Elsevier, vol. 130(2), pages 392-408.
    11. Petr Houdek & Petr Koblovský, 2016. "Behavioural Finance and Organisations: A Review [Přehled oboru behaviorální finance a organizace]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2016(2), pages 33-45.
    12. Dora L. Costa, 2014. "Leaders: Privilege, Sacrifice, Opportunity, and Personnel Economics in the American Civil War," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 30(3), pages 437-462.
    13. Sunder, Jayanthi & Sunder, Shyam V. & Zhang, Jingjing, 2017. "Pilot CEOs and corporate innovation," Journal of Financial Economics, Elsevier, vol. 123(1), pages 209-224.
    14. Ian D. Gow & Steven N. Kaplan & David F. Larcker & Anastasia A. Zakolyukina, 2016. "CEO Personality and Firm Policies," NBER Working Papers 22435, National Bureau of Economic Research, Inc.
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    21. Limbach, Peter & Sonnenburg, Florian, 2014. "CEO fitness and firm value," CFR Working Papers 14-12, University of Cologne, Centre for Financial Research (CFR).
    22. Steven N. Kaplan & Morten Sorensen, 2017. "Are CEOs Different? Characteristics of Top Managers," NBER Working Papers 23832, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    CEOs; Fraud; Military; Ethics; Corporate Governance;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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