Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1326: CEO Health

Matti Keloharju (), Samuli Knüpfer () and Joacim Tåg ()
Additional contact information
Matti Keloharju: Aalto University School of Business, Postal: CEPR and Research Institute of Industrial Economics, Stockholm, Sweden,
Samuli Knüpfer: BI Norwegian Business School, Postal: and Research Institute of Industrial Economics,, Stockholm, Sweden
Joacim Tåg: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

Abstract: Using comprehensive data on 28 cohorts in Sweden, we analyze CEO health and its determinants and consequences. We find CEOs are in much better health than the population and on par with other high-skill professionals. These results apply in particular to mental health and to CEOs of larger companies. We explore three channels which could account for CEOs’ robust health. First, we find health predicts appointment to a CEO position. Second, the CEO position has no discernible impact on the health of its holder. Third, poor health is associated with greater CEO turnover. Here, both contemporaneous health and health at the time of appointment matter. These results are consistent with boards appointing CEOs with health robust enough to withstand the pressures of the job, correcting mismatches occurring at the time of appointment, and responding expediently to health shocks. Poor CEO health also has adverse consequences: we find a statistically significant association between mental health and corporate performance. This result can be traced to smaller-firm CEOs, for whom a one standard deviation deterioration in mental health translates into a performance reduction of 8% relative to the mean. These results suggest board oversight has enough friction for CEO health to affect performance.

Keywords: CEOs; Appointments; Turnover; Mental Health; Physical Health; Performance

JEL-codes: G34; I12; J24; J31

67 pages, First version: March 25, 2020. Revised: November 19, 2021. Earlier revisions: April 20, 2020.

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