Article | Journal of Accounting & Economics | February 2018

Bank CEO Materialism: Risk Controls, Culture and Tail Risk

by Robert Bushman, Robert Davidson, Aiyesha Dey and Abbie Smith

Abstract

We investigate how the prevalence of materialistic bank CEOs has evolved over time and how risk management policies, non-CEO executives’ behavior, and tail risk vary with CEO materialism. We document that the proportion of banks run by materialistic CEOs increased significantly from 1994 to 2004, that the strength of risk management functions is significantly lower for banks with materialistic CEOs, and that non-CEO executives in banks with materialistic CEOs insider trade more aggressively around government intervention during the financial crisis. Finally, we find that banks with materialistic CEOs have significantly more downside tail risk relative to banks with non-materialistic CEOs.

Keywords: Management; Personal Characteristics; Behavior; Risk Management; Organizational Culture; Banks and Banking; Banking Industry;

Format: Print Find at Harvard

Citation:

Bushman, Robert, Robert Davidson, Aiyesha Dey, and Abbie Smith. "Bank CEO Materialism: Risk Controls, Culture and Tail Risk." Journal of Accounting & Economics 65, no. 1 (February 2018): 191–220.

About the Author

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Aiyesha Dey
Høegh Family Associate Professor of Business of Administration
Accounting and Management

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