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Does CEO Fitness Matter?

46 Pages Posted: 3 Sep 2014 Last revised: 18 Nov 2015

Peter Limbach

University of Cologne and Centre for Financial Research (CFR)

Florian Sonnenburg

University of Cologne - Centre for Financial Research (CFR)

Date Written: November 17, 2015

Abstract

This study provides evidence suggesting that CEOs’ physical fitness has a positive impact on firm value, consistent with the beneficial effects of fitness on, e.g., cognitive functions, stress coping and job performance. For each of the years 2001 to 2011, we define S&P 1500 CEOs as fit if they finish a marathon. CEO fitness is also associated with higher firm profitability and higher M&A announcement returns. Our identification strategy includes CEO-firm fixed effects, instrumental variables, permutation tests, random effects, and time-varying CEO, firm and industry effects. An additional analysis of sudden CEO deaths, based on a fitness measure not limited to running, confirms our results.

Keywords: CEO heterogeneity, firm value, mergers and acquisitions, physical fitness

JEL Classification: G32, G34, J24

Suggested Citation

Limbach, Peter and Sonnenburg, Florian, Does CEO Fitness Matter? (November 17, 2015). 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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