CEO Stress and Life Expectancy: The Role of Corporate Governance and Financial Distress
Optimal pay-for-performance has to account for private benefits distorting managerial incentives. We focus on one aspect of private benefits -- CEO health and mortality. Our identification exploits the staggered introduction of anti-takeover laws since the mid-1980s as well as exposure to industry shocks. Using a hand-collected data set on the dates of birth and death for more than 1,600 CEOs employed by large, publicly listed U.S. firms, we estimate that the insulation from market discipline via anti-takeover laws lowers mortality rates by six to eight percent. This effect is concentrated in the first four to five years of exposure. The estimated effect size is large compared to naturally occurring changes in life expectancy over time. We also find that CEOs who exclusively served under strict governance are more likely to pass away while in office or within the first five years of stepping down as CEO. We estimate similar effects on longevity arising from exposure to industry-wide distress during a CEO's tenure. Finally, in preliminary analyses, we utilize machine-learning based age estimation software to detect visible signs of aging in CEOs who experience distress shocks.