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Firms with Single CEOs Are Riskier Investments: Study
CNBC.com | March 13, 2012 | 04:03 PM EDT

Investing in firms run by single chief executives is riskier than investing in companies run by CEOs who are married, says a new study from the National Bureau of Economic Research.

The working paper, entitled, “Status, Marriage, and Managers’ Attitudes to Risk,” finds that single CEOs invest more aggressively in capital expenditures, R&D, advertising and acquisitions, and that their companies exhibit higher stock-return volatility.

“Our research shows that CEOs’ personal life decisions may interact with some of the key decisions they make in managing their firms in an important way,” says Wharton Business School professor Nikolai Roussanov, one of the study's authors.

In general, a firm run by a single CEO invests 10 percent more and the volatility of its stock returns is 3 percent higher, according to the study.

The numbers get more startling when the study takes into account that single CEOs tend to run, on average, smaller and younger firms. Then, investment is 69 percent higher for companies with single CEOs and stock return volatility is 24 percent higher.

The study looked at more than 5,700 chief executives of public companies. Married CEOs accounted for 84 percent of the sample, while single CEOs made up 20 percent.

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