Do CEOs Matter? Evidence from Hospitalization Events
MORTEN BENNEDSEN
Search for more papers by this authorFRANCISCO PÉREZ-GONZÁLEZ
Search for more papers by this authorCorresponding Author
DANIEL WOLFENZON
Morten Bennedsen is with the University of Copenhagen and INSEAD. Francisco Pérez-González is with ITAM. Daniel Wolfenzon is with Columbia University. Previous versions of this paper circulated under the titles “Do CEOs Matter?” and “Estimating the Value of the Boss: Evidence from Hospitalization Events.” We thank the Editor for his valuable input and the referees for their helpful comments. We thank seminar and conference participants from numerous places in United States, Europe, and Asia for excellent comments and suggestions. We are grateful to the Danish National Research Foundation, the Danish Social Science Research Foundation, the EPRN network, and the Hoffmann Research Foundation for financial support. Francisco Pérez-González thanks Asociación Mexicana de Cultura, A.C., for financial support. We are also grateful to the Danish Commerce and Companies Agency and the Research Office in Statistics Denmark for providing us with data, and to Shruti Sheth, Jihye Jang, and Jiacheng Yan for excellent research assistance. We are particularly grateful to Pernille Bang and Kamilla Heurlen for their help with accessing various data sources. In accordance with the disclosure principles of The Journal of Finance, we state that none of the three authors has anything to disclose.
Correspondence: Daniel Wolfenzon, Columbia Business School, Columbia University, 3022 Broadway, New York, NY 10027; e-mail: dw2382@gsb.columbia.edu.
Search for more papers by this authorMORTEN BENNEDSEN
Search for more papers by this authorFRANCISCO PÉREZ-GONZÁLEZ
Search for more papers by this authorCorresponding Author
DANIEL WOLFENZON
Morten Bennedsen is with the University of Copenhagen and INSEAD. Francisco Pérez-González is with ITAM. Daniel Wolfenzon is with Columbia University. Previous versions of this paper circulated under the titles “Do CEOs Matter?” and “Estimating the Value of the Boss: Evidence from Hospitalization Events.” We thank the Editor for his valuable input and the referees for their helpful comments. We thank seminar and conference participants from numerous places in United States, Europe, and Asia for excellent comments and suggestions. We are grateful to the Danish National Research Foundation, the Danish Social Science Research Foundation, the EPRN network, and the Hoffmann Research Foundation for financial support. Francisco Pérez-González thanks Asociación Mexicana de Cultura, A.C., for financial support. We are also grateful to the Danish Commerce and Companies Agency and the Research Office in Statistics Denmark for providing us with data, and to Shruti Sheth, Jihye Jang, and Jiacheng Yan for excellent research assistance. We are particularly grateful to Pernille Bang and Kamilla Heurlen for their help with accessing various data sources. In accordance with the disclosure principles of The Journal of Finance, we state that none of the three authors has anything to disclose.
Correspondence: Daniel Wolfenzon, Columbia Business School, Columbia University, 3022 Broadway, New York, NY 10027; e-mail: dw2382@gsb.columbia.edu.
Search for more papers by this authorABSTRACT
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.
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