Archive | 2021
CEO mobility and corporate policy risk
Abstract
Career concerns can limit a manager s willingness to take risks, which can lead to excessive policy conservatism. An increase in a CEO s ability and willingness to change jobs (CEO mobility) can diversify her human capital and reduce her conservatism. We derive several CEO mobility measures and relate them to a policy riskiness index that captures the overall risk embedded in a firm s corporate policies. We find a strong positive relation between CEO mobility and the riskiness of corporate policies. We also link external regulatory shocks that constrain labor mobility to significant drops in corporate risk-taking.