This project studies to what extent firm policies are affected by managers’ personal assets allocation, asset allocation, and founders' opportunity cost
We contribute to the literature by providing empirical evidence on the role of managers in corporate policies. In addition, our comprehensive data set allow us to alleviate endogeneity concerns by investigating how changes in CEO's personal risk preferences and wealth shape firm policies within CEO-firm pairs.
Our research improves our understanding of the determinants of firm policies. Our findings for the hedging hypothesis provide a deeper insight on managerial incentives and corporate governance design that ensures corporate resources are used to maximize stakeholder value instead of managerial personal risk management and personal wealth.