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Did the COVID-19 Shock Impair the Stock Performance of Companies with Older CEOs?

Author

Listed:
  • Giovanni Ferri

    (Università di Roma LUMSA)

  • Raffaele Lagravinese

    (Università degli Studi di Bari "Aldo Moro")

  • Giuliano Resce

    (Università degli Studi del Molise)

Abstract

Since its lethality increases exponentially with age, the early 2020 COVID-19 shock unexpectedly raised the risk of corporate disruption at companies led by older CEOs. While normally unprepared successions might be beneficial by replacing entrenched CEOs, this systemic shock projected a possible crowding of older CEOs' successions, with disruption costs dominating changeover benefits. Within this natural experiment, we find that stock returns and volatility worsened at S&P 500 listed companies with older CEOs when the COVID-19 lethal risk emerged. Our results resist various robustness checks. This advises companies to adopt contingency strategies of top managers' replacement against possibly recurring pandemics.

Suggested Citation

  • Giovanni Ferri & Raffaele Lagravinese & Giuliano Resce, 2021. "Did the COVID-19 Shock Impair the Stock Performance of Companies with Older CEOs?," SERIES 02-2021, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Jun 2021.
    • Handle: RePEc:bai:series:series_wp_02-2021
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    More about this item

    Keywords

    COVID-19; Stock Performance; CEO’s Age; S&P 500;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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