Managers' risk preferences and firm investment: the moderating role of early‐life war exposure and firm size

We conducted a lab-in-the-field experiment with 623 top managers from textile and garment firms in Vietnam to investigate the nexus of top managers' risk preferences and firm investment. We find that firms led by managers with higher levels of loss aversion tend to have lower investments. The heterogeneity in managers' loss aversion also affects different investment levels of small and medium-sized enterprises (SMEs) vis-à-vis large firms. Interestingly, our findings reveal that managers' loss aversion has a strong link to investment behaviours of firms led by war-exposed managers, who born and grew up during the American war in Vietnam. However, this pattern does not hold for firms led by their counterparts. This result shows that personal early-life war exposure may influence managers' investment decisions during their adulthood.

This is the peer reviewed version of the following article: Kim, H. and Nguyen, Q. 2025. Managers' risk preferences and firm investment: the moderating role of early‐life war exposure and firm size. International Journal of Finance & Economics, which has been published in final form at https://doi.org/10.1002/ijfe.3134 . This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions (https://authorservices.wiley.com/author-resources/Journal-Authors/li...).