Management

Journal of Financial Economics 109 (2013) 103–121

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Journal of Financial Economics journal homepage: www.elsevier.com/locate/jfec

Managerial attitudes and corporate actions$
John R. Graham a,b, Campbell R. Harvey a,b, Manju Puri a,b,n a b

Fuqua School of Business, Duke University, Durham, NC 27708, USA
National Bureau of Economic Research, Cambridge, MA 02912, USA

a r t i c l e i n f o

abstract

Article history:
Received 13 September 2010
Received in revised form
25 May 2012
Accepted 25 June 2012
Available online 4 February 2013

We administer psychometric tests to senior executives to obtain evidence on their underlying psychological traits and attitudes. We find US CEOs differ significantly from non-US CEOs in terms of their underlying attitudes. In addition, we find that CEOs are significantly more optimistic and risk-tolerant than the lay population. We provide evidence that CEOs’ behavioral traits such as optimism and managerial risk-aversion are related to corporate financial policies. Further, we provide new empirical evidence that
CEO traits such as risk-aversion and time preference are related to their compensation.
& 2013 Elsevier B.V. All rights reserved.

JEL classification:
G30
G32
G34
Keywords:
Managers
Attitudes
Personality traits
Risk-aversion
Capital structure
Debt
Acquisitions
Corporate policies
Behavioral corporate finance

$
We appreciate the comments of Zahi Ben-David, Jack Bovender,
Alon Brav, Murillo Campello, Steve Dimmock, Don Durfee, Simon
Gervais, Dirk Hackbarth, Bill Holstein, Janet Kersnar, Ahmed Khwaja,
Hong Liu, Mary Frances Luce, Pete Nicholas, David Robinson, Antoinette
Schoar, Hersh Sheffrin, Meir Statman, Jack Soll, Morton Sorenson, Will
Mitchell, David Walonick, Ivo Welch, and seminar participants at ASSA meetings, San Francisco, Case Western University, Duke University,
Federal Reserve Bank of Kansas City, Norwegian School

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