Is Leisure Consumption Purely Managerial Shirking?

44 Pages Posted: 3 Sep 2014 Last revised: 9 Nov 2017

Peter Limbach

University of Cologne and Centre for Financial Research (CFR)

Florian Sonnenburg

University of Cologne - Centre for Financial Research (CFR)

Date Written: November 7, 2017

Abstract

We provide evidence that CEO leisure consumption can benefit shareholders. We measure leisure consumption primarily by CEO marathon participations, which indicate time-consuming investments in physical fitness. Panel and IV regressions as well as stock returns around marathon participations and sudden CEO deaths suggest that CEO leisure consumption has positive net benefits associated with higher firm value. Consistently, we find that professional investors more likely buy firms led by CEOs who run marathons. Our results contrast the widespread view that leisure consumption generally reflects costly managerial shirking and indicate that what matters is not whether CEOs consume leisure, but how.

Keywords: CEO leisure consumption, CEO fitness activities, firm value, mutual fund trades, shirking

JEL Classification: G30, G11, J24

Suggested Citation

Limbach, Peter and Sonnenburg, Florian, Is Leisure Consumption Purely Managerial Shirking? (November 7, 2017). Available at SSRN: https://ssrn.com/abstract=2489967 or http://dx.doi.org/10.2139/ssrn.2489967

Peter Limbach (Contact Author)

University of Cologne and Centre for Financial Research (CFR) ( email )

Albertus-Magnus-Platz
Köln, 50923
Germany

HOME PAGE: http://www.finance.uni-koeln.de

Florian Sonnenburg

University of Cologne - Centre for Financial Research (CFR) ( email )

Albertus-Magnus Platz
Cologne, 50923
Germany

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