Do Markets Price CEOs Health Hazards? Evidence From the COVID-19 Pandemic

Forthcoming, Quarterly Journal of Finance

52 Pages Posted: 9 Jul 2020 Last revised: 28 Nov 2022

See all articles by Juan-Pedro Gomez

Juan-Pedro Gomez

IE Business School - IE University

Maxim Mironov

IE Business School, IE University

Date Written: November 25, 2022

Abstract

We find evidence that markets anticipate the potential loss of firm value in the event of the CEO falling sick and eventually dying of COVID-19 in a sample of almost 3,000 listed firms from across 137 regions in 10 European countries. First, we use soccer games as “super-spreader” events. The instrumented number of infected cases per capita in the region where company headquarters are located predicts a significant drop in stock returns during March and April 2020 for firms managed by CEOs with a higher probability of dying from COVID-19. Second, we show that the stock price of these firms increases significantly the day in which positive news on the development of COVID-19 vaccines are released in the market.

Keywords: COVID-19, CEO value, soccer, stock returns, super-spreader, vaccines, market efficiency

JEL Classification: G01, G12, G14, M12

Suggested Citation

Gomez, Juan-Pedro and Mironov, Maxim, Do Markets Price CEOs Health Hazards? Evidence From the COVID-19 Pandemic (November 25, 2022). Forthcoming, Quarterly Journal of Finance, Available at SSRN: https://ssrn.com/abstract=3645401 or http://dx.doi.org/10.2139/ssrn.3645401

Juan-Pedro Gomez (Contact Author)

IE Business School - IE University ( email )

Calle Maria de Molina 12
Madrid, Madrid 28006
Spain
+34 917821326 (Phone)

HOME PAGE: http://www.ie.edu/faculty/juan-pedro-gomez/

Maxim Mironov

IE Business School, IE University ( email )

Calle Maria de Molina 12, 4izda
Madrid, Madrid 28006
Spain

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