In this study, we investigate the effects of CEO marital status on credit risk assessments. We find that firms with married CEOs receive more favorable credit ratings. We also find that firms with married CEOs have a lower bankruptcy risk, less exposure to business uncertainty shocks, and better institutional corporate social responsibility ...
In this study, we investigate the effects of CEO marital status on credit risk assessments. We find that firms with married CEOs receive more favorable credit ratings. We also find that firms with married CEOs have a lower bankruptcy risk, less exposure to business uncertainty shocks, and better institutional corporate social responsibility (CSR) performance, giving richer insights into potential mechanisms through which married CEOs improve credit ratings. Furthermore, we find that the positive effects of married CEOs on credit ratings are more pronounced for firms with stronger CEO risk-taking incentives provided by option compensation and firms with greater tournament incentives measured as the pay gap between the CEO and the next layer of senior executives. Overall, this study emphasizes the implications of CEO marital status for debtholder wealth.
