Working Paper: NBER ID: w19782
Authors: Efraim Benmelech; Carola Frydman
Abstract: There is mounting evidence of the influence of personal characteristics of 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.
Keywords: No keywords provided
JEL Codes: D23; G3; G31; G32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| military service (H56) | conservative corporate policies (G38) |
| military CEOs (H56) | corporate fraud (G38) |
| military service (H56) | ethical behavior and decision-making under pressure (D91) |
| military CEOs (H56) | performance during industry downturns (L16) |
| military experience (H56) | resilience in crisis situations (H12) |
| military service (H56) | corporate investment (G31) |
| military service (H56) | research and development expenditures (O32) |
| military service (H56) | leverage ratios (G32) |