CEO/board medical background and stock returns during the COVID-19 pandemic
CEO/board medical background and stock returns during the COVID-19 pandemic
The study investigates the impact of the CEO/board medical background on stock return reactions to COVID-19. CEOs/boards having a medical background possess a knowledge advantage, which enables them to identify risks earlier, take faster action and better prepare for business operations in response to pandemic shocks. Using data from China between January 1st and March 31st, 2020, we find that firms with CEOs or board members having medical background experienced a less severe pandemic-related decline in stock returns. This effect is more evident for firms having a powerful CEO, with more medical directors and located in cities with fewer medical resources. Better operating performance and more investment activities are underlying mechanisms that result in the outperformance of firms with medical expertise. Overall, our findings highlight the critical role of the expertise and experiences of senior executives in shaping the responses to adverse events.
Zhao, Jing
8c64f8be-b112-4595-81d4-fb19fc2d591d
Cao, June
af0d62ff-d54c-412f-a152-cc04c63c7290
Huang, Jingchang
5bba76f8-a33a-4151-970e-e96c83e271ed
11 August 2023
Zhao, Jing
8c64f8be-b112-4595-81d4-fb19fc2d591d
Cao, June
af0d62ff-d54c-412f-a152-cc04c63c7290
Huang, Jingchang
5bba76f8-a33a-4151-970e-e96c83e271ed
Zhao, Jing, Cao, June and Huang, Jingchang
(2023)
CEO/board medical background and stock returns during the COVID-19 pandemic.
Economic Modelling, 127, [106469].
(doi:10.1016/j.econmod.2023.106469).
Abstract
The study investigates the impact of the CEO/board medical background on stock return reactions to COVID-19. CEOs/boards having a medical background possess a knowledge advantage, which enables them to identify risks earlier, take faster action and better prepare for business operations in response to pandemic shocks. Using data from China between January 1st and March 31st, 2020, we find that firms with CEOs or board members having medical background experienced a less severe pandemic-related decline in stock returns. This effect is more evident for firms having a powerful CEO, with more medical directors and located in cities with fewer medical resources. Better operating performance and more investment activities are underlying mechanisms that result in the outperformance of firms with medical expertise. Overall, our findings highlight the critical role of the expertise and experiences of senior executives in shaping the responses to adverse events.
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19 CEO board medical background and stock returns during the COVID-19 pandemic
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Accepted/In Press date: 5 August 2023
e-pub ahead of print date: 9 August 2023
Published date: 11 August 2023
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Local EPrints ID: 501345
URI: http://eprints.soton.ac.uk/id/eprint/501345
ISSN: 0264-9993
PURE UUID: 979f2909-6939-457a-b5dc-1b57fe52c085
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Date deposited: 29 May 2025 16:49
Last modified: 22 Aug 2025 02:49
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Author:
Jing Zhao
Author:
June Cao
Author:
Jingchang Huang
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