CEOs’ experience of the Great Chinese Famine and accounting conservatism

Jun Hu, Wenbin Long*, Gary Gang Tian, Daifei (Troy) Yao

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

This study investigates how a CEO's early-life experience of the Great Chinese Famine affects corporate accounting conservatism. We find that companies whose CEOs had experienced famines in early life adopted more conservative accounting policies. This famine experience effect is more pronounced in high uncertainty environments proxied by non-SOEs, politician turnovers and the adoption of International Financial Reporting Standards (IFRS). Additional tests indicate that CEOs with famine experience tend to support conservative accounting practices for contingencies and accelerate the recognition of asset impairments in negative events. Overall, consistent with imprinting theory, our results highlight the role of early-life traumatic experiences in shaping CEOs’ risk preferences and financial reporting policies.

Original languageEnglish
Pages (from-to)1089-1112
Number of pages24
JournalJournal of Business Finance and Accounting
Volume47
Issue number9-10
Early online date2 Aug 2020
DOIs
Publication statusPublished - Oct 2020

Keywords

  • accounting conservatism
  • CEO behavior
  • CEO famine experience
  • risk-taking

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