Saturday, Jan. 4, 2020 10:15 AM - 12:15 PM (PDT)
- Chair: Dirk Jenter, London School of Economics
Life Is Too Short? Bereaved Managers and Investment Decisions
AbstractWe examine whether bereavement affects managerial investment decisions. In two separate samples of actively managed mutual funds and publicly traded firms during 1999−2013, we find managers take significantly less risk after deaths in the family, compared to their matched peers. Funds managed by bereaved managers exhibit higher correlations with return factors, smaller tracking errors, lower active share measures and higher portfolio weights on larger stocks after the bereavement events. Firms managed by bereaved CEOs exhibit lower capital expenditures, fewer acquisitions, lower debt issuance, and lower CEO ownerships after the bereavement events. These documented long-term effects cannot be explained merely by short-term distraction. The risk-shifting patterns have negative implications on the performance of mutual funds and firms with bereaved managers.
The Impact of Financial Literacy on Medium and Large Enterprises – Evidence from a Randomized Controlled Trial in Mozambique
AbstractA randomized controlled trial (RCT) with 74 medium and large companies in Mozambique identifies a positive treatment effect of a finance executive education programme for top managers on financial policies and firm profitability. Using survey data as well as accounting data, we find that managers adjust several financial policies in response of the treatment. The largest treatment effects are for policies related to working capital. We also find these policy changes related with efficiency gains. Our results suggest that relatively small and low cost interventions such as an 18-hour, in class, financial executive education program improves financial practices and can ultimately affect economic development.
- G3 - Corporate Finance and Governance