Showing papers by "David Yermack published in 2012"
TL;DR: This paper investigated whether the diversification discount occurs partly as an artifact of poor corporate governance and found that the discount narrows by 16% to 21% when they add governance variables as regression controls.
225 citations
TL;DR: This paper studied real estate purchases by major company CEOs, compiling a database of the principal residences of nearly every top executive in the Standard and Poor's 500 index and found that future company performance is inversely related to the CEO's liquidation of company shares and options for financing the transaction.
Abstract: We study real estate purchases by major company CEOs, compiling a database of the principal residences of nearly every top executive in the Standard and Poor’s 500 index. When a CEO buys real estate, future company performance is inversely related to the CEO’s liquidation of company shares and options for financing the transaction. We also find that, regardless of the source of finance, future company performance deteriorates when CEOs acquire extremely large or costly mansions and estates. We therefore interpret large home acquisitions as signals of CEO entrenchment. Our research also provides useful insights for calibrating utility based models of executive compensation and for understanding patterns of Veblenian conspicuous consumption.
76 citations
01 Jan 2012
TL;DR: Amihud et al. as discussed by the authors identified vacations by merging corporate jet flight histories with real-estate records of CEOs' property owned near leisure destinations, showing close connections between CEOs' vacation schedules and corporate news disclosures.
Abstract: This paper shows close connections between CEOs’ vacation schedules and corporate news disclosures I identify vacations by merging corporate jet flight histories with real estate records of CEOs’ property owned near leisure destinations Companies disclose favorable news just before CEOs leave for vacation and delay subsequent announcements until CEOs return, releasing news at an unusually high rate on the CEO’s first day back When CEOs are away, companies announce less news than usual and stock prices exhibit sharply lower volatility Volatility increases immediately when CEOs return to work CEOs spend fewer days out of the office when their ownership is high and when the weather at their vacation homes is cold or rainy For helpful comments I thank Yakov Amihud, Sreedhar Bharath, Jonathan Cohn, Claudia Custodio, Robert Engle, Peter Koudijs, Michael Knobler, Kate Litvak, Lalitha Naveen, Ralph Walkling, and seminar participants at Arizona State, Oklahoma, Yale, and the NYU-Penn Law and Finance conference Mark Maremont of The Wall Street Journal offered invaluable help with aircraft flight data, and Maria Aristizabal provided superb research assistance 1 Tailspotting: How disclosure, stock prices and volatility change when CEOs fly to their vacation homes
6 citations