AAA Spark Meeting of the Regions

The Life Behind the CEO: Spouse Effects and CEO Risk-Taking

• In Event: Corporate Risk

Abstract

We examine how a CEO’s family life affects his/her corporate decisions. Specifically, we investigate whether CEO spouse, the most influential member of a CEO’s family, affects one aspect of important business decisions that CEO makes – risk-taking behavior. Examining the S&P 500 firms during 2010-2012, we find evidence that CEOs make more aggressive financial reporting decisions when their spouses are professional, defined as either working spouses or spouses holding graduate degrees. We also find some evidence that firms led by CEOs with professional spouses exhibit higher accounting return volatility. We do not find significant association between professional spouses and firms’ market return volatility. Our results suggest that professional spouses influence the CEO’s work life through indirect channels where CEOs with professional spouses either experience higher family-work conflict and turn to behave more aggressively or enjoy more wealth diversification that allows them to take more risk.

Authors

• Valerie Li, San Diego State University

• Qianqian Du, University of Victoria