Managerial conservatism and corporate policies

K.T. Duong, C. Banti, N. Instefjord

Research output: Contribution to journalArticlepeer-review


This paper investigates how conservative managers make corporate decisions. Motivated by psychology research, we use handwritten signatures (i.e., emotionally restraint disclosure styles) as a proxy for CEO conservatism. We find that firms with conservative CEOs engage more with safer investments (capital expenditures), engage less with risky policies (Research & Development expenses and debt financing), hold more cash, are less likely to pay cash dividends, and more likely to use stock repurchase schemes. We use the same proxy for CFO conservatism. We find that CFO conservatism is a better determinant than CEO conservatism for cash holding and financing policies, but the reverse is true for investment policies. Conservative CFOs prefer long-term debt to short-term debt. © 2021 Elsevier B.V.
Original languageEnglish
Article number101973
Number of pages26
JournalJournal of corporate finance
Early online date23 Apr 2021
Publication statusPublished - 1 Jun 2021

Cite this