There are at least three potential ways in which a CEO divorce might impact a corporation and its shareholders: It might reduce the executive’s control or influence over the organization. It might affect his or her productivity, concentration, and energy levels. Third, it can influence attitudes toward risk. We examine these in detail, and ask: Should shareholders and boards be concerned when a CEO and spouse separate? Should the board make the CEO “whole” in order to restore equity incentives to where they were prior to divorce? Is divorce a private matter, or should companies disclose this information to shareholders?
Copyright held by David F. Larcker, Allan McCall, and Brian Tayan. Further inquiries about reproduction and use should be directed to the Corporate Governance Research Initiative.
