Abstract
We examine the effect of CEO childhood socioeconomic status (SES) on firm risk. Using hand-collected data on US CEOs' private high-school attendance as proxy for high-SES, we find that firms led by high-SES CEOs exhibit 5.35% lower firm risk. This effect diminishes with CEO tenure, analyst coverage, and institutional ownership, consistent with the market expectations hypothesis. High-SES CEOs do not differ in corporate risk-taking, incentives, ability, performance, or crisis management. Our findings support the SES theory, which suggests that socioeconomic background acts as a signal that shapes investor expectations, rather than reflecting differences in CEO behaviour or competence.