Status, Marriage, and Managers' Attitudes To Risk
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.
This paper was revised on February 22, 2013
Document Object Identifier (DOI): 10.3386/w17904
Published: "Marriage and Managers' Attitudes to Risk," Nikolai Roussanov and Pavel Savor, current draft: December 2013. Management Science, Volume 60, Issue 10, October 2014
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