CEO Divorce and Firm Operating Performance
Academy of Management Discoveries, Forthcoming
55 Pages Posted: 9 Jun 2022
Date Written: May 26, 2022
We examine how CEO divorce affects firm operating performance. To this end, we use population-level data of CEOs in Denmark over the 2000-2012 sample period. Applying a difference-in-differences research design, we study matching pairs of firms with married and divorcing CEOs. We find that CEO divorce is associated with significant underperformance — as measured by operating ROA (OROA) and industry-adjusted OROA — but only under specific circumstances: in small firms, in high-growth industries, when children are present in the CEO household, and when the income difference between the CEO and spouse is high. Overall, in addition to social implications, we find that CEO divorce can have significant economic ramifications for firms.
Keywords: CEO, divorce, private life events, firm operating performance
JEL Classification: G14, G41
Suggested Citation: Suggested Citation