Brian M. Lucey, Yulia Plaksina and Michael Dowling
The paper aims to examine whether and under what circumstances social status of chief executives can be associated with corporate financial decisions, in particular via risk…
Abstract
Purpose
The paper aims to examine whether and under what circumstances social status of chief executives can be associated with corporate financial decisions, in particular via risk aversion or risk loving to the extent of mergers and acquisitions.
Design/methodology/approach
The authors use mixed methods, drawing metrics of social status (acquired and ascribed) from anthropological and sociological research, applying these, and then using panel econometrics to check the statistical importance of the uncovered relationships.
Findings
The authors find in the paper that it is possible, for FTSE companies, to successfully measure and apply measures of social status from public records; they find strong evidence of a negative relationship between CEO ascribed and achieved social status and his or her acquisitiveness. However, the influence of achieved status appears to be more consistent and significant than that of the ascribed status, indicating its dominant role in determining overall attained status.
Research limitations/implications
The research is limited in its data coverage, to FTSE members. However, it does show that it is possible to take useful and meaningful concepts from areas quite removed from traditional finance and to incorporate these into a traditional finance methodology.
Practical implications
The paper has practical implications for both aspirant and existing corporate officers and for investors.
Social implications
Social status is omnipresent and poorly understood as a mitigator or enabler of financial transactions, although there is some evidence that it is important.
Originality/value
This research bridges a gap that has heretofore only been very sparsely mapped, and provides suggested routes for further research.