A number of recent studies have focused on how the behavior of chief executives affects their firms’ financial decisions. We contribute to this literature by looking at the connections between CEOs’ personal finances and those of their firms. Unique data from the Finnish tax authorities allow us to examine these connections in detail. Our dataset contains information on the personal indebtedness and personal securities holdings of CEOs of all publicly-traded firms in Finland. We avoid the challenges typical of U.S. studies, where the data limit the analysis of managers’ wealth to their stock and option awards.
Our analysis finds a … Read more