Faculty Digital Archive

Archive@NYU >
Stern School of Business >
Finance Working Papers >

Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/27403

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

Files in This Item:

File Description SizeFormat
FIN-07-042.pdf198.51 kBAdobe PDFView/Open

Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.

 

The contents of the FDA may be subject to copyright, be offered under a Creative Commons license, or be in the public domain.
Please check items for rights statements. For information about NYU’s copyright policy, see http://www.nyu.edu/footer/copyright-and-fair-use.html 
Valid XHTML 1.0 | CSS