Do they recall their past? CEOs’ liquidity policies across firms as they switch jobs

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College of Business


The purpose of this paper is to examine any resemblance among the corporate liquidity policies across US firms under the same leadership. The paper extends the literature on behavioral consistency by examining various conditions under which the past could amplify or alter the future. We test the sensitivity of the analysis to the CEO's tenure and resignation status from a firm as well as the previous firm's financial constraint and the cash flow volatility. We find a significantly positive association between the prior and the subsequent firm's cash holdings when they are managed by the same CEO even if they are totally distinct firms. The result strengthens as the CEOs’ tenure at the prior institution lengthens that is conditional on it being either financially constrained or having a highly volatile cash flow. The results of this paper show that CEOs’ financial decisions are sticky. Therefore, their prior experience and career path might lead to potential policies they might implement at their subsequent firms.

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© 2021 Elsevier B.V. Publisher’s version of record:

Publication Title

Journal of Behavioral and Experimental Finance