Wards Finance Seminar Series. "Parent CEOs and Corporate Investment"
Published: 25 October 2024
06 November 2024. Professor Grzegorz Pawlina, Lancaster University
Professor Grzegorz Pawlina, Lancaster University
"Parent CEOs and Corporate Investment"
Wednesday, 06 November 2024. 15:00-16:30
Room 386AB, Adam Smith Business School
Abstract
We develop a simple model to analyze the relationship between the number of the CEO’s children and corporate investment. Results based on the sample of 432 CEOs of S&P 500 firms support the model’s predictions that CEOs with more children have on average higher propensity to increase firm size and reduce its cash flow risk. The former relationship is attenuated for companies with better corporate governance but also for financially constrained firms. Excessive corporate investment by CEOs with more children is generally followed by a negative stock market reaction. Overall, entrenchment-increasing overinvestment and cash flow risk reduction can be seen as the CEO’s optimal response to their greater expected unemployment cost and the cost of effort (degree of inattention) resulting from a higher children number.
Bio
Grzegorz Pawlina is a Professor of Finance at Lancaster University Management School. His research interests focus on continuous-time corporate finance, interactions between corporate financing and investment decisions under uncertainty, debt valuation, and the problem of optimal exercise of real options in game-theoretical situations. His work has been published, among others, in Journal of Financial and Quantitative Analysis, Review of Finance, Review of Accounting Studies, Journal of Corporate Finance and Journal of Economic Dynamics and Control, and been presented at international conferences that include the meetings of European Finance Association, Financial Management Association, European Economic Association and the Econometric Society. Grzegorz has taught BSc, MSc and PhD courses on corporate finance, financial markets and decision making under uncertainty and held visiting positions at such institutions as Aarhus University, the University of Michigan Stephen M. Ross School of Business, and Warwick Business School. He earned a doctorate in Finance from Tilburg University, the Netherlands, and MSc degree in Economics from Warsaw School of Economics.
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First published: 25 October 2024