“Hazed and confused: Prenatal pollutant exposure and CEO risk-taking”

Raghavendra Rau             

University of Cambridge

Abstract: Over the past several decades, there has been intense scrutiny on the effect of pollution on human health. This literature typically examines health consequences at the individual level. In this paper, we document the impact of prenatal exposure to pollution on CEOs, individuals who are likely to make consequential real decisions that affect large sections of society. Specifically, we draw on the extensive medical literature documenting the harm caused by developmental pollutants released by the most hazardous plants in the U.S. These effects were plausibly unknown when the CEO was born. We find that the CEOs with greater prenatal exposure to Superfund sites take more risks, but the risks do not pay off, adversely affecting the firm’s value, and the CEOs experience higher forced turnover. Our results point to an indirect effect of pollution beyond the immediate health effects. They also demonstrate the role that prenatal exposure to pollution plays in affecting CEO managerial styles