CEO relational identification, mortality science, and reprioritization following director deaths

• Main Authors: CHEN, Guoli, CROSSLAND, Craig, HUANG, Sterling
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: CEO experiences; corporate governance; corporate social responsibility; Business Law, Public Responsibility, and Ethics
• Online Access: https://ink.library.smu.edu.sg/soa_research/2022
• Institution: Singapore Management University

Anecdotal and empirical evidence from a broad range of sources suggests that individuals often respond to the death of a peer by re-evaluating their approach to, and priorities in, their life and their career. In this study, we synthesize work addressing this general human tendency with management research in the domain of strategic leadership. Building on relational identification theory, we argue that CEOs who experience the death of a director at the same firm will subsequently change their personal and organizational priorities. We hypothesize, and find evidence for our claim, that firms led by CEOs experiencing peer deaths will show an increase in short- term inefficiency, a reduction in long-term investment, and an increase in corporate social responsibility (CSR) activities. We provide further support for our theory by showing that the impact of experiencing the death of a peer is amplified by several factors that are likely to increase a CEO’s level of relational identification with the deceased – CEO-director demographic similarity and the suddenness of the death. To test our hypotheses, we use a sample of director deaths in U.S. public firms and a difference-in-differences estimation approach.