Did the COVID-19 Shock Impair the Stock Performance of Companies with Older CEOs?
SERIES Working Papers N. 02/2021
22 Pages Posted: 15 Jun 2021
Date Written: June 2021
Since its lethality increases exponentially with age, the early 2020 COVID-19 shock unexpectedly raised the risk of corporate disruption at companies led by older CEOs. While normally unprepared successions might be beneficial by replacing entrenched CEOs, this systemic shock projected a possible crowding of older CEOs’ successions, with disruption costs dominating changeover benefits. Within this natural experiment, we find that stock returns and volatility worsened at S&P 500 listed companies with older CEOs when the COVID-19 lethal risk emerged. Our results resist various robustness checks. This advises companies to adopt contingency strategies of top managers’ replacement against possibly recurring pandemics.
Keywords: COVID-19, Stock Performance, CEO’s Age, S&P 500
JEL Classification: C23, G12, G32, M12
Suggested Citation: Suggested Citation