Featured Research

from universities, journals, and other organizations

Study links personal, corporate risk-taking; Examination of CEOs with private pilots' licenses indicates potential benefits in bold behavior

Date:
August 12, 2011
Source:
University of Oregon
Summary:
A CEO who enjoys the adrenaline rush of flying a private airplane is more likely than other chief executives to exhibit similarly bold management characteristics, according to a new study.

A CEO who enjoys the adrenaline rush of flying a private airplane is more likely than other chief executives to exhibit similarly bold management characteristics, according to a new study by finance professors at the University of Oregon and the University of Notre Dame.

Related Articles


The study, "Cleared for Takeoff? CEO Personal Risk-Taking and Corporate Policies," documents a link between the personality traits of high-flying executives and business moves such as mergers, acquisitions and accumulation of debt. The study is co-authored by Stephen McKeon, an assistant professor of finance at the UO's Lundquist College of Business; and Matthew Cain, an assistant professor of finance at Notre Dame's Mendoza College of Business.

"CEOs who seek thrills in their personal lives are more likely than others to be aggressive in their corporate policies," McKeon said. "They also tend to be effective leaders. If anything, these CEOs execute acquisitions that are more value-creating than those completed by other executives."

For their study, McKeon and Cain compared 179 corporate executives who hold private pilots' licenses to 2,900 non-pilot CEOs. The Sensation Seeking Scale -- developed in the 1970s by psychologist Marvin Zuckerman and used since then in hundreds of psychological studies -- identifies the desire to fly airplanes as a very high predictor of thrill- and adventure-seeking traits.

The co-authors identified the subjects of their studies by searching the Federal Aviation Administration's airmen certification database and other public records.

Prior research indicates that undesirable behaviors sometimes exhibited by thrill-seekers tend to show up in those who lack outlets for their creativity. The study conducted by Cain and McKeon suggests that managing a public corporation may serve as a creative release and draw out abilities that can be beneficial to the executives' firms.

"We found a variety of evidence to support our hypothesis that risk-taking CEOs are associated with riskier corporate policies," McKeon said. "These individuals take on higher leverage than their counterparts and are more active in mergers and acquisitions. The volatility of equity returns in their companies also is higher."

That can be either a good thing or a bad thing, depending on the company and its corporate goals and needs, he said.

"It may be that risk-taking CEOs are good for some firms but not as good for others," McKeon said. "Our evidence can be used during the hiring process to help boards of directors better understand the behavioral tendencies of CEO candidates prior to selection."

The study is currently posted for peer review on the Social Science Research Network website. It can be downloaded at no cost.

McKeon and Cain began work on the study when they were doctoral students together at Purdue University's Krannert School of Management. McKeon received his bachelor's degree in finance from the University of Oregon, and his master's degree in economics and his doctorate in finance from Purdue. He joined the UO faculty this month.


Story Source:

The above story is based on materials provided by University of Oregon. Note: Materials may be edited for content and length.


Journal Reference:

  1. Cain, Matthew D. and McKeon, Stephen B. Cleared for Takeoff? CEO Personal Risk-Taking and Corporate Policies. Available at SSRN, May 1, 2011 [link]

Cite This Page:

University of Oregon. "Study links personal, corporate risk-taking; Examination of CEOs with private pilots' licenses indicates potential benefits in bold behavior." ScienceDaily. ScienceDaily, 12 August 2011. <www.sciencedaily.com/releases/2011/08/110810093829.htm>.
University of Oregon. (2011, August 12). Study links personal, corporate risk-taking; Examination of CEOs with private pilots' licenses indicates potential benefits in bold behavior. ScienceDaily. Retrieved November 22, 2014 from www.sciencedaily.com/releases/2011/08/110810093829.htm
University of Oregon. "Study links personal, corporate risk-taking; Examination of CEOs with private pilots' licenses indicates potential benefits in bold behavior." ScienceDaily. www.sciencedaily.com/releases/2011/08/110810093829.htm (accessed November 22, 2014).

Share This


More From ScienceDaily



More Science & Society News

Saturday, November 22, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

WFP: Ebola Risks Heightened Among Women Throughout Africa

WFP: Ebola Risks Heightened Among Women Throughout Africa

AFP (Nov. 21, 2014) Having children has always been a frightening prospect in Sierra Leone, the world's most dangerous place to give birth, but Ebola has presented an alarming new threat for expectant mothers. Duration: 00:37 Video provided by AFP
Powered by NewsLook.com
Toyota's Hydrogen Fuel-Cell Green Car Soon Available in the US

Toyota's Hydrogen Fuel-Cell Green Car Soon Available in the US

AFP (Nov. 21, 2014) Toyota presented its hydrogen fuel-cell compact car called "Mirai" to US consumers at the Los Angeles auto show. The car should go on sale in 2015 for around $60.000. It combines stored hydrogen with oxygen to generate its own power. Duration: 01:18 Video provided by AFP
Powered by NewsLook.com
Ebola: Life Without School in Guinea

Ebola: Life Without School in Guinea

AFP (Nov. 21, 2014) Following the closure of schools and universities in Guinea because of the Ebola virus, students look for temporary work or gather in makeshift classrooms to catch up on their syllabus. Duration: 02:14 Video provided by AFP
Powered by NewsLook.com
NSA Director: China Can Damage US Power Grid

NSA Director: China Can Damage US Power Grid

AP (Nov. 20, 2014) China and "one or two" other countries are capable of mounting cyberattacks that would shut down the electric grid and other critical systems in parts of the United States, according to Adm. Michael Rogers, director of the National Security Agency and hea Video provided by AP
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:

Strange & Offbeat Stories


Science & Society

Business & Industry

Education & Learning

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins