| While Behavioral Finance Theory combines people's psychology and behavior with the framework of financial research,Upper Echelons Theory attracts researchers' attention to the impact on corporate governance and investment decision-making from the traditional macro-market,industry,company and policy to the background characteristics of managers.However,at present,there is still no study about the impact on the firm value when considering managers' different degrees of disaster experience.Whether managers' severity of disaster experience affect corporate financial decision-making and corporate value? How does it affect in particular? This article takes various natural disasters occurring in counties from 1949 to 2010 as exogenous shock,and divides the managers into three groups based on the severity of disasters that CEO experienced in early life.With the use of companies' financial data from 2005 to 2016,we tested the question above.Empirical results show that managers who experienced severe disasters perform more aggressively in financial decisionmaking than managers who experienced minor disasters,leading firms that behave less cash and more mergers and acquisitions(M&A);managers who experienced moderate disasters are more conservatively,and the firm policies always behave as more cash and more M&A as well;because of the different financial decisions,the information passed to the market allows investors' evaluation of the enterprises varying in different degrees,which indirectly shows that the disaster experience influences the stock risk and enterprise value.The managers who witnessed moderate disasters usually have a higher daily return volatility;with fully controlling of the variables that have an impact on corporate value,we found that companies with managers who have witnessed moderate and severe disasters have higher valuations than those who have experienced minor disasters,especially the latter one performed more obvious. |
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