Are Companies "Risk-Neutral"?

I've always wondered why it's so readily common in finance to assume that a company is "risk-neutral."  The common idea is that people are risk-averse, but organizations are risk-neutral.

And yet, that's always bothered me, because a company doesn't make decisions - rather, the people that comprise the company and the corporate culture make operational and strategic corporate decisions.  And if people tend to be risk-averse -- doesn't that attitude toward risk carryover into their working lives and activities?

Here's a paper posted on the Social Science Research Network (SSRN, at www.ssrn.com) titled "Behavioral Consistency in Corporate Finance: CEO Personal and Corporate Leverage," which seems to point in the direction of my concern.  Here's the abstract:

"We find that firms behave consistently with how their CEOs behave personally in the context of leverage choices. Analyzing data on CEOs' leverage in their most recent primary home purchases, we find a positive, economically relevant, robust relation between corporate and personal leverage in the cross-section and when examining CEO turnovers. The results are consistent with an endogenous matching of CEOs to firms based on preferences, as well as with CEOs imprinting their personal preferences on the firms they manage, particularly when governance is weaker. Besides enhancing our understanding of the determinants of corporate capital structures, the broader contribution of the paper is to show that CEOs' personal behavior can, in part, explain corporate financial behavior of the firms they manage."

- Rick