Abstract

http://ssrn.com/abstract=2155756
 


 



In Sickness and in Health: Firm Performance and Managerial Health


Sara B. Holland


University of Georgia - C. Herman and Mary Virginia Terry College of Business

Ugur Lel


Virginia Polytechnic Institute & State University - Department of Finance, Insurance, and Business Law

October 1, 2012


Abstract:     
We examine how managerial health affects firm value and policies using the insight that managerial effort depends in part on the health of the manager and health is part of human capital. Using hand-collected samples of non-sudden deaths and medical leaves of top managers, we find that firm value is considerably lower and corporate financial policies are largely less precarious in the years preceding the death of the manager. There is also some evidence that R&D intensity falls. In addition, the stock price declines by about two percent when top managers take medical leaves. Chronic conditions such as cancer primarily produce these effects. Overall, our results suggest that the medical condition of top managers has important consequences for the performance and financial policies of firms.

Number of Pages in PDF File: 52

JEL Classification: G3, G31, G32, I1, K22

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Date posted: October 4, 2012 ; Last revised: October 8, 2012

Suggested Citation

Holland, Sara B. and Lel, Ugur, In Sickness and in Health: Firm Performance and Managerial Health (October 1, 2012). Available at SSRN: http://ssrn.com/abstract=2155756 or http://dx.doi.org/10.2139/ssrn.2155756

Contact Information

Sara B. Holland (Contact Author)
University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )
Brooks Hall
Athens, GA 30602-6254
United States
Ugur Lel
Virginia Polytechnic Institute & State University - Department of Finance, Insurance, and Business Law ( email )
1016 Pamplin Hall (0221)
Blacksburg, VA 24060-0221
United States
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