Abstract
Previous studies have linked personal characteristics of business leaders to corporate decisions. We analyze if the traumatic experience of the Chinese Famine had an impact on managerial decisions. Having lived through the famine is associated with more conservative financial, investment, and cash holding policies, a lower likelihood of unethical behavior, and better firm performance during economic downturns. By exploiting the exogenous variation in local severity of the famine, we establish a causal relationship between early-life experiences and corporate policies. Our findings thus provide evidence that momentous personal experiences can have important causal effects on managerial decisions.