CEO social class origins and risk taking

The literature has shown that personal characteristics of Chief Executive Officers (CEOs) affect their decision‐making. We use the type of school they attended as a proxy for social class origins and show that CEOs from the working‐ or middle‐class origins take on significantly higher corporate leverage by nearly 15%. This result is robust across a variety of different testing procedures and endogeneity tests, while the effect is stronger for CEOs with higher wealth sensitivity, closer to retirement and who are not overly powerful CEOs. An implication is that the social class origins of CEOs affect their decision‐making and should be considered when appointing CEOs.