Letting go or pushing forward: Director death and firm risk-taking

We draw on behavioral strategy, terror management, and post traumatic growth theories to examine how a sudden director death may affect firm risk-taking. Two opposing predictions are developed. One is that a director death can trigger anxiety, prompting a CEO to become less committed to his or her job and decreasing a firm's risk-taking tendency. Alternatively, the passing of a director may evoke death reflection, inducing a CEO to pursue higher-order goals and initiate more projects with substantial uncertainties. Results based on a sample of publicly traded firms in the United States suggest that while a director death may diminish firm long-term investment, this event could fuel strategic nonconformity. Our findings suggest that the impact of director death on firm strategies could be more nuanced than the existing literature has suggested.