Do CEOs Matter? Evidence from Hospitalization Events

By Morten Bennedsen, Francisco Pérez-González, Daniel Wolfenzon. 2020

158 citations recorded by the source corpus.

Using variation in firms’ exposure to their CEOs resulting from hospitalization, we estimate the effect of chief executive officers (CEOs) on firm policies, holding firm‐CEO matches constant. We document three main findings. First, CEOs have a significant effect on profitability and investment. Second, CEO effects are larger for younger CEOs, in growing and family‐controlled firms, and in human‐capital‐intensive industries. Third, CEOs are unique: the hospitalization of other senior executives does not have similar effects on the performance. Overall, our findings demonstrate that CEOs are a key driver of firm performance, which suggests that CEO contingency plans are valuable.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/0f7d73c3da857277a406840d53018c0a4f3dbded