Does early-life war trauma in CEOs affect corporate credit ratings?

This paper investigates whether a CEO’s early-life traumatic experiences are associated with a firm’s credit rating. Using data on CEOs who experienced the Korean War, we find that firms led by war-traumatized CEOs tend to have higher credit ratings than those led by non-traumatized CEOs. The results remain robust when controlling for managerial characteristics and through the use of propensity score matching, entropy balancing, and various alternative specifications. CEO turnover analysis further supports the causality of the war trauma effect. We also find that the positive association is more pronounced in firms affiliated with chaebols and in investment-grade firms. Overall, these results support the view that traumatic experiences contributing to managerial conservatism are an important factor in credit rating agencies’ credit risk assessments.