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

Giovanni Ferri, Raffaele Lagravinese and Giuliano Resce ()

No 02-2021, SERIES from Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro"

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.

Keywords: COVID-19; Stock Performance; CEO’s Age; S&P 500 (search for similar items in EconPapers)
JEL-codes: C23 G12 G32 M12 (search for similar items in EconPapers)
Pages: 277
Date: 2021-06, Revised 2021-06
New Economics Papers: this item is included in nep-cfn, nep-fmk, nep-ore and nep-rmg
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