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Do Markets Price CEOs Health Hazards? Evidence from the COVID-19 Pandemic

Author

Listed:
  • Juan Pedro Gómez

    (IE Business School, IE University, María de Molina 12, 28006 Madrid, Spain)

  • Maxim Mironov

    (IE Business School, IE University, María de Molina 12, 28006 Madrid, Spain)

Abstract

We find evidence that markets anticipate the potential loss of firm value in the event of the CEO falling sick and eventually dying of COVID-19 in a sample of almost 3000 listed firms from across 137 regions in 10 European countries. First, we use soccer games as “super-spreader†events. The instrumented number of infected cases per capita in the region where company headquarters are located predicts a significant drop in stock returns during March and April 2020 for firms managed by CEOs with a higher probability of dying from COVID-19. Second, we show that the stock price of these firms increases significantly the day on which positive news on the development of COVID-19 vaccines are released in the market.

Suggested Citation

  • Juan Pedro Gómez & Maxim Mironov, 2022. "Do Markets Price CEOs Health Hazards? Evidence from the COVID-19 Pandemic," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 12(04), pages 1-46, December.
    • Handle: RePEc:wsi:qjfxxx:v:12:y:2022:i:04:n:s201013922250015x
    DOI: 10.1142/S201013922250015X
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    More about this item

    Keywords

    COVID-19; CEO value; soccer; stock returns; super-spreader; vaccines; market efficiency;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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