CEO Divorce and Firm Operating Performance

Academy of Management Discoveries, Forthcoming

55 Pages Posted: 9 Jun 2022

See all articles by Ingo Kleindienst

Ingo Kleindienst

Aarhus University, Department of Management

Kaleb Girma Abreha

World Bank

Denis Schweizer

Concordia University

Juliane Proelss

Concordia University, Quebec; Trier University of Applied Sciences

Tunde Cserpes

Aarhus University, Department of Management

Date Written: May 26, 2022

Abstract

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

Kleindienst, Ingo and Abreha, Kaleb Girma and Schweizer, Denis and Proelss, Juliane and Cserpes, Tunde, CEO Divorce and Firm Operating Performance (May 26, 2022). Academy of Management Discoveries, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4120621 or http://dx.doi.org/10.2139/ssrn.4120621

Ingo Kleindienst

Aarhus University, Department of Management ( email )

Fuglesangs Alle 4
Aarhus V, 8210
Denmark

Kaleb Girma Abreha

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Denis Schweizer (Contact Author)

Concordia University ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada
+1 (514) 848-2424 ext. 2926 (Phone)
+1 (514) 848-4500 (Fax)

HOME PAGE: http://www.concordia.ca/jmsb/faculty/denis-schweizer.html

Juliane Proelss

Concordia University, Quebec ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1MB
Canada

Trier University of Applied Sciences ( email )

Scheidershof
Trier, 54293
Germany

Tunde Cserpes

Aarhus University, Department of Management ( email )

Fuglesangs Alle 4
Aarhus V, 8210
Denmark

HOME PAGE: http://mgmt.au.dk/

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