CEO Health and Corporate Governance

65 Pages Posted: 14 Apr 2020 Last revised: 21 Apr 2020

See all articles by Matti Keloharju

Matti Keloharju

Aalto University School of Business; Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Samuli Knüpfer

BI Norwegian Business School; Research Institute of Industrial Economics (IFN)

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Date Written: April 20, 2020

Abstract

Boards hire and fire CEOs based on imperfect information. Using comprehensive data on 28 cohorts in Sweden, we analyze the role of a potentially important attribute—CEO health—in corporate governance. Boards hire CEOs who are healthier than other high-skill professionals, in particular in mental health. After hiring, CEOs’ health develops similarly to a control group of executives. Health predicts turnover, measured at appointment and during tenure. These results are consistent with boards appointing CEOs with health robust enough to withstand the pressures of the job, correcting mismatches occurring at the time of appointment, and responding expediently to health shocks.

Keywords: CEOs, Corporate Governance, Executives, Mental Health, Physical Health

JEL Classification: G34; I12; J24; J31

Suggested Citation

Keloharju, Matti and Knüpfer, Samuli and Tåg, Joacim, CEO Health and Corporate Governance (April 20, 2020). IFN Working Paper No. 1326, Available at SSRN: https://ssrn.com/abstract=3560071 or http://dx.doi.org/10.2139/ssrn.3560071

Matti Keloharju

Aalto University School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Samuli Knüpfer

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

HOME PAGE: http://www.samuliknupfer.com

Research Institute of Industrial Economics (IFN)

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Joacim Tåg (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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