Abstract

http://ssrn.com/abstract=970413
 
 

References (27)



 
 

Citations (14)



 


 



Where are the Shareholders' Mansions? CEOs' Home Purchases, Stock Sales, and Subsequent Company Performance


Crocker H. Liu


Arizona State University

David Yermack


New York University (NYU) - Stern School of Business

October 17, 2007


Abstract:     
We study real estate purchases by major company CEOs, compiling a database of the principal residences of nearly every top executive in the Standard & Poor's 500 index. When a CEO buys real estate, future company performance is inversely related to the CEO's liquidation of company shares and options for financing the transaction. We also find that, regardless of the source of finance, future company performance deteriorates when CEOs acquire extremely large or costly mansions and estates. We therefore interpret large home acquisitions as signals of CEO entrenchment. Our research also provides useful insights for calibrating utility based models of executive compensation and for understanding patterns of Veblenian conspicuous consumption.

Number of Pages in PDF File: 45

Keywords: residential real estate, insider trading, conspicuous consumption

JEL Classification: G32, R31


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Date posted: March 15, 2007 ; Last revised: October 22, 2007

Suggested Citation

Liu, Crocker H. and Yermack, David, Where are the Shareholders' Mansions? CEOs' Home Purchases, Stock Sales, and Subsequent Company Performance (October 17, 2007). Available at SSRN: http://ssrn.com/abstract=970413 or http://dx.doi.org/10.2139/ssrn.970413

Contact Information

Crocker H. Liu
Arizona State University ( email )
W.P. Carey School of Business
P.O. Box 873906
Tempe, AZ 85287-3906
United States
480-965-3259 (Phone)
480-965-8539 (Fax)
HOME PAGE: http://www.public.asu.edu/~chliu1
David Yermack (Contact Author)
New York University (NYU) - Stern School of Business ( email )
44 West 4th Street
Suite 9-160
New York, NY 10012-1126
United States
212-998-0357 (Phone)
212-995-4220 (Fax)
HOME PAGE: http://www.stern.nyu.edu/~dyermack
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