Bank CEO materialism: Risk controls,culture and tail risk |
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| Authors: | Robert M Bushman Robert H Davidson Aiyesha Dey Abbie Smith |
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| Institution: | 1. Kenan-Flagler Business School, University of North Carolina-Chapel Hill, 300 Kenan Dr, Chapel Hill, NC 27599, United States;2. Georgetown University, 3700 O Street NW, Washington DC 20057, United States;3. University of Minnesota, Carlson School of Management, 321 Nineteenth Street S, Minneapolis, MN 55455, United States;4. The University of Chicago Booth School of Business, 5807 S Woodlawn Avenue, Chicago, IL 60637, United States |
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| Abstract: | We investigate how the prevalence of materialistic bank CEOs has evolved over time, and how risk management policies, non-CEO executives’ behavior and tail risk vary with CEO materialism. We document that the proportion of banks run by materialistic CEOs increased significantly from 1994 to 2004, that the strength of risk management functions is significantly lower for banks with materialistic CEOs, and that non-CEO executives in banks with materialistic CEOs insider trade more aggressively around government intervention during the financial crisis. Finally, we find that banks with materialistic CEOs have significantly more downside tail risk relative to banks with non-materialistic CEOs. |
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| Keywords: | Executive materialism Corporate culture Bank risk G01 G02 G18 G21 G32 G38 |
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