We investigate the relationship between CEOs' past distress experience and risk-taking in US property–liability insurance companies. Our evidence shows that CEOs' past distress experience is negatively associated with insurers' risk-taking behavior, suggesting that CEOs with distress experiences tend to take lower levels of risk in making financial decisions for their firms. The results are robust to using alternative measures of risk-taking, including value at risk, expected shortfall, volatility of stock return, idiosyncratic volatility, systematic volatility, underwriting risk, and investment risk. Additionally, our results pass a placebo test, and we mitigate endogeneity concerns with the propensity score matching method.
