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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27403
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| Title: | Where are the shareholders’ mansions? CEOs’ home purchases,
stock sales, and subsequent company performance |
| Authors: | Liu, Crocker
Yermack, David |
| Keywords: | residential real estate
insider trading
CEO entrenchment
conspicuous consumption |
| Issue Date: | 17-Oct-2007 |
| Series/Report no.: | FIN-07-042 |
| 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 & 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. |
| URI: | http://hdl.handle.net/2451/27403 |
| Appears in Collections: | Finance Working Papers
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