Hot-Stove Effects: The Impact of CEO Past Corporate Experiences on Dividend Policy
Publication Date
8-28-2022
Document Type
Article
Publication Title
Journal of Financial and Quantitative Analysis
Volume
57
Issue
5
DOI
10.1017/S002210902100034X
First Page
1695
Last Page
1726
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.
Department
Accounting and Finance
Recommended Citation
Matthew Faulkner and Luis García-Feijóo. "Hot-Stove Effects: The Impact of CEO Past Corporate Experiences on Dividend Policy" Journal of Financial and Quantitative Analysis (2022): 1695-1726. https://doi.org/10.1017/S002210902100034X
