Work

CEO Divorce and Firm Operating Performance

Year: 2022

Type: article

Abstract: We examine how CEO divorce affects firm operating performance. To this end, we use population-level data of CEOs in Denmark over the 2000-2012 sample period. Applying a difference-in-differences research design, we study matching pairs of firms with married and divorcing CEOs. We find that CEO divorce is associated with significant underperformance — as measured by operating ROA (OROA) and industry-adjusted OROA — but only under specific circumstances: in small firms, in high-growth industries, when children are present in the CEO household, and when the income difference between the CEO and spouse is high. Overall, in addition to social implications, we find that CEO divorce can have significant economic ramifications for firms.

Source: Academy of Management Discoveries

DOI: 10.5465/amd.2020.0031

Authors: Ingo Kleindienst, Kaleb Girma Abreha, Denis Schweizer, Juliane Proelss, Tunde Cserpes

Institutions: World Bank, Aarhus University, World Bank Group, Concordia University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funders: Aarhus Universitet, Aarhus Universitets Forskningsfond, Concordia University