Behavioral Consistency in Corporate Finance: CEO Personal and Corporate Leverage

@article{Cronqvist2011BehavioralCI,
  title={Behavioral Consistency in Corporate Finance: CEO Personal and Corporate Leverage},
  author={Henrik Cronqvist and Anil K. Makhija and Scott E. Yonker},
  journal={Corporate Governance: Actors \& Players eJournal},
  year={2011}
}
We find that firms behave consistently with how their CEOs behave personally in the context of leverage choices. Analyzing data on CEOs' leverage in their most recent primary home purchases, we find a positive, economically relevant, robust relation between corporate and personal leverage in the cross-section and when examining CEO turnovers. The results are consistent with an endogenous matching of CEOs to firms based on preferences, as well as with CEOs imprinting their personal preferences… Expand
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