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Managerial conservatism and corporate policies

Duong, Kiet Tuan and Banti, Chiara and Instefjord, Norvald (2021) 'Managerial conservatism and corporate policies.' Journal of Corporate Finance, 68. p. 101973. ISSN 0929-1199

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This paper investigates how conservative managers make corporate decisions. Motivated by psychology research, we use handwritten signatures (i.e., emotionally restraint disclosure styles) as a proxy for CEO conservatism. We find that firms with conservative CEOs engage more with safer investments (capital expenditures), engage less with risky policies (Research & Development expenses and debt financing), hold more cash, are less likely to pay cash dividends, and more likely to use stock repurchase schemes. We use the same proxy for CFO conservatism. We find that CFO conservatism is a better determinant than CEO conservatism for cash holding and financing policies, but the reverse is true for investment policies. Conservative CFOs prefer long-term debt to short-term debt.

Item Type: Article
Uncontrolled Keywords: CEO conservatism; CFO conservatism; Corporate policies; Signature style
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 26 Apr 2021 11:52
Last Modified: 23 Oct 2022 01:00

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