Living through an influential socio-political event: Early-life experiences and stock price crash risk

Using China's Cultural Revolution as a shock to risk attitude, this study examines how CEOs' early-life experiences impact stock price crash risk. We find that CEOs who experienced the Cultural Revolution in their early life are more risk-averse and less inclined to withhold negative news, resulting in a reduced level of stock price crash risk. Further, the more severe the CEO's exposure to the Cultural Revolution, the more pronounced the Cultural Revolution effect. Additional analysis suggests that CEOs' Cultural Revolution effect is more salient in firms with weak regional law enforcement. Our study highlights the enduring impact of influential socio-political events during early life on the decision-making processes of CEOs.