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- Publisher Website: 10.1287/orsc.2021.1443
- WOS: WOS:000709021100001
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Article: No-Fly Zone in the Loan Office: How Chief Executive Officers’ Risky Hobbies Affect Credit Stakeholders’ Evaluation of Firms
Title | No-Fly Zone in the Loan Office: How Chief Executive Officers’ Risky Hobbies Affect Credit Stakeholders’ Evaluation of Firms |
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Authors | |
Keywords | pilot CEO risky hobby off-the-job activities stakeholder theory upper echelons theory |
Issue Date | 2021 |
Publisher | INFORMS. The Journal's web site is located at https://pubsonline.informs.org/journal/orsc |
Citation | Organization Science, 2021, Epub 2021-03-09 How to Cite? |
Abstract | The extant research has often examined the work-related experiences of corporate executives, but their off-the-job activities could be just as insightful. This study employs a novel proxy for the risky hobbies of chief executive officers (CEOs)—CEOs’ hobby of piloting a private aircraft—and investigates its effect on credit stakeholders’ evaluation of the firms led by the CEOs as reflected in bank loan contracting. Using a longitudinal data set on CEOs of large United States-listed firms across multiple industries between 1993 and 2010, we obtain strong evidence that bank loans to firms steered by CEOs who fly private jets as a hobby tend to incur a higher cost of debt, to be secured, to have more covenants, and to be syndicated. These effects are mainly driven by banks, which perceive such firms as having a higher default risk. These relationships become stronger when the CEO is more important to the firm and/or can exercise stronger control over decision making. Supplemented by field interviews, our results are also robust to various endogeneity checks using different experimental designs, the Heckman two-stage model, a propensity score-matching approach, a difference-in-differences test, and the impact threshold of confounding variables. |
Persistent Identifier | http://hdl.handle.net/10722/297666 |
ISSN | 2023 Impact Factor: 4.9 2023 SCImago Journal Rankings: 5.632 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Ouyang, B | - |
dc.contributor.author | Tang, Y | - |
dc.contributor.author | Wang, C | - |
dc.contributor.author | Zhou, J | - |
dc.date.accessioned | 2021-03-23T04:20:05Z | - |
dc.date.available | 2021-03-23T04:20:05Z | - |
dc.date.issued | 2021 | - |
dc.identifier.citation | Organization Science, 2021, Epub 2021-03-09 | - |
dc.identifier.issn | 1047-7039 | - |
dc.identifier.uri | http://hdl.handle.net/10722/297666 | - |
dc.description.abstract | The extant research has often examined the work-related experiences of corporate executives, but their off-the-job activities could be just as insightful. This study employs a novel proxy for the risky hobbies of chief executive officers (CEOs)—CEOs’ hobby of piloting a private aircraft—and investigates its effect on credit stakeholders’ evaluation of the firms led by the CEOs as reflected in bank loan contracting. Using a longitudinal data set on CEOs of large United States-listed firms across multiple industries between 1993 and 2010, we obtain strong evidence that bank loans to firms steered by CEOs who fly private jets as a hobby tend to incur a higher cost of debt, to be secured, to have more covenants, and to be syndicated. These effects are mainly driven by banks, which perceive such firms as having a higher default risk. These relationships become stronger when the CEO is more important to the firm and/or can exercise stronger control over decision making. Supplemented by field interviews, our results are also robust to various endogeneity checks using different experimental designs, the Heckman two-stage model, a propensity score-matching approach, a difference-in-differences test, and the impact threshold of confounding variables. | - |
dc.language | eng | - |
dc.publisher | INFORMS. The Journal's web site is located at https://pubsonline.informs.org/journal/orsc | - |
dc.relation.ispartof | Organization Science | - |
dc.subject | pilot CEO | - |
dc.subject | risky hobby | - |
dc.subject | off-the-job activities | - |
dc.subject | stakeholder theory | - |
dc.subject | upper echelons theory | - |
dc.title | No-Fly Zone in the Loan Office: How Chief Executive Officers’ Risky Hobbies Affect Credit Stakeholders’ Evaluation of Firms | - |
dc.type | Article | - |
dc.identifier.email | Tang, Y: msytang@hku.hk | - |
dc.identifier.authority | Tang, Y=rp02574 | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1287/orsc.2021.1443 | - |
dc.identifier.hkuros | 321905 | - |
dc.identifier.volume | Epub 2021-03-09 | - |
dc.identifier.isi | WOS:000709021100001 | - |
dc.publisher.place | United States | - |