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Status, Marriage, and Managers' Attitudes To Risk

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  • Nikolai Roussanov
  • Pavel G. Savor

Abstract

Status concerns can drive risk-taking behavior by affecting the payoff to a marginal dollar of wealth. If status concerns arise endogenously due to competition in the marriage market, then unmarried individuals should take greater risks. We test this hypothesis by studying corporate CEOs. We find that single CEOs are associated with firms exhibiting higher stock return volatility, pursue more aggressive investment policies, and are not affected by increases in idiosyncratic risk. These effects are weaker for older CEOs. Our results also hold when we use variation in divorce laws across states to instrument for CEO marital status.

Suggested Citation

  • Nikolai Roussanov & Pavel G. Savor, 2012. "Status, Marriage, and Managers' Attitudes To Risk," NBER Working Papers 17904, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17904
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    References listed on IDEAS

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    Cited by:

    1. Shang-Jin Wei & Xiaobo Zhang, 2016. "The Competitive Saving Motive: Concept, Evidence, and Implications," Frontiers of Economics in China, Higher Education Press, vol. 11(3), pages 355-366, September.

    More about this item

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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