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The effects of CEO’s divorce on firm’s performance: an empirical research of US firms

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The effects of CEO’s divorce on firm’s performance: an empirical research of US firms

Wang, Yuan (2017) The effects of CEO’s divorce on firm’s performance: an empirical research of US firms. Masters thesis, Concordia University.

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Abstract

To empirically examine the effects of CEOs’ private lives on firms’ performance, I use CEOs’ divorce events as a proxy and collect all CEO divorce cases in the U.S. market from 1980 to 2013. I predict that divorce stress negatively affects CEOs’ ability to make benign strategic decisions, thereby negatively influencing firms’ performance. I find that divorced firms have worse performance than their counterparties before divorce events end and such events motivate CEOs to re-devote themselves to their job post-divorce. The boards of shareholders also use equity-based compensation as a valuable method to incentivize divorced CEOs due to their substantial loss of outside wealth. Furthermore, divorced CEOs reduce their risk tolerance and become more risk averse as they lose wealth and become less diversified in their portfolios.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Thesis (Masters)
Authors:Wang, Yuan
Institution:Concordia University
Degree Name:M. Sc.
Program:Administration (Finance option)
Date:10 March 2017
Thesis Supervisor(s):Schweizer, Denis
ID Code:982212
Deposited By: YUAN WANG
Deposited On:09 Jun 2017 15:17
Last Modified:01 Mar 2019 01:00
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