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

See all articles by Giovanni Ferri

Giovanni Ferri

LUMSA University

Raffaele Lagravinese

Università degli Studi di Bari “Aldo Moro” (UNIBA)

Giuliano Resce

University of Rome III; University of Molise

Date Written: June 2021

Abstract

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

Ferri, Giovanni and Lagravinese, Raffaele and Resce, Giuliano, Did the COVID-19 Shock Impair the Stock Performance of Companies with Older CEOs? (June 2021). SERIES Working Papers N. 02/2021, Available at SSRN: https://ssrn.com/abstract=3861455 or http://dx.doi.org/10.2139/ssrn.3861455

Giovanni Ferri

LUMSA University ( email )

Via della Traspontina
Roma, Rome 00192
Italy

HOME PAGE: http://www.lumsa.it/giovanni-ferri

Raffaele Lagravinese (Contact Author)

Università degli Studi di Bari “Aldo Moro” (UNIBA) ( email )

Piazza Umberto I
Bari, 70121
Italy

Giuliano Resce

University of Rome III ( email )

Via Ostiense, 159
Rome, RM 00145
Italy

University of Molise ( email )

Italy

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