CEO performance impact on medical leave outcomes

Douglas O. Cook and Weiwei Zhang

Journal of Banking & Finance, 2023, vol. 154, issue C

Abstract: Using a comprehensive CEO medical leave dataset, we find that prior firm performance is an important determinant of CEOs’ return to their position at the firm. Firms continue to experience superior performance measured by raw returns, market-adjusted returns, and industry-adjusted returns after the return of outperforming CEOs, reaffirming the performance-driven career outcome for medical leave CEOs. We also find that shareholders generally respond negatively to medical leave news while CEO age and prior performance significantly affect stock price reactions to the news. Shareholders respond more negatively to the return of older CEOs and CEOs with extended medical leave. Shareholders react more positively to the return of outperforming CEOs. Investors respond more negatively to CEO exit news if preceding medical leave news indicated an expected CEO return. We also find that the return of CEOs and duration of medical leave are negatively associated with ex-post abnormal returns or alphas using the CAPM model.

Keywords: CEO medical leave; ex-ante firm performance; CEO career outcomes; shareholders’ reaction; ex-post performance (search for similar items in EconPapers)
JEL-codes: G14 G34 M12 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426623001759
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:154:y:2023:i:c:s0378426623001759

DOI: 10.1016/j.jbankfin.2023.106977

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().