CEO to the Rescue: Residential Proximity of Private Firm CEOs and the Evolution of Corporate Profitability

Artikel

This paper documents how the net profit margin of private firms improves when the CEOs of the companies relocate their primary residence to be closer to the corporate headquarters. By reviewing 127 Korean non-public companies belonging to 66 private business groups, we find that the top managers move closer to the headquarters when the profitability of the firms has recently deteriorated. A one basis point decline in the margin causes CEOs to relocate their homes approximately two kilometers closer to their corporate headquarters. The profit margin rebounds after their relocation. This finding implies that physical proximity can serve as a proxy for personal commitment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: KDI Journal of Economic Policy ; ISSN: 2586-4130 ; Volume: 38 ; Year: 2016 ; Issue: 4 ; Pages: 1-21 ; Sejong: Korea Development Institute (KDI)

Classification and Topics

• Classification: Wirtschaft ; Corporate Finance and Governance: General ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Corporate Finance and Governance: Other
• Subject: CEO ; Corporate Governance ; Geographic ; Commitment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kim, Woo Jin ; Yang, Dong-Ryung
• Event: Veröffentlichung
• (who): Korea Development Institute (KDI)
• (where): Sejong
• (when): 2016

Further information

• DOI: doi:10.23895/kdijep.2016.38.4.1
• Handle: http://hdl.handle.net/10419/200796
• Last update: 10.03.2025, 11:42 AM CET