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Do CEOs Matter? Evidence from Hospitalization Events

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  • MORTEN BENNEDSEN
  • FRANCISCO PÉREZ‐GONZÁLEZ
  • DANIEL WOLFENZON

Abstract

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.

Suggested Citation

  • Morten Bennedsen & Francisco Pérez‐González & Daniel Wolfenzon, 2020. "Do CEOs Matter? Evidence from Hospitalization Events," Journal of Finance, American Finance Association, vol. 75(4), pages 1877-1911, August.
    • Handle: RePEc:bla:jfinan:v:75:y:2020:i:4:p:1877-1911
    DOI: 10.1111/jofi.12897
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