FORE! An Analysis of CEO Shirking
Miami University of Ohio - Department of Finance
David C. Cicero
University of Alabama - Culverhouse College of Commerce & Business Administration
University of Tennessee, Knoxville
August 1, 2014
Using golf play as a measure of leisure, we document that there is significant variation in the amount of leisure that CEOs consume. We find that they consume more leisure when they have lower equity-based incentives. CEOs that golf frequently (i.e., those in the top quartile of golf play, who play at least 22 rounds per year) are associated with firms that have lower operating performance and firm values. Numerous tests accounting for the possible endogenous nature of these relations support a conclusion that CEO shirking causes lower firm performance. We find that boards are more likely to replace CEOs who shirk, but CEOs with longer tenures or weaker governance environments appear to avoid disciplinary consequences.
Number of Pages in PDF File: 50
Keywords: CEO, Chief Executive Officer, Shirking, Leisure, Incentives Compensation
JEL Classification: G30, G32, G34
Date posted: September 13, 2014 ; Last revised: November 5, 2014
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