Flights of fancy: Corporate jets,CEO perquisites,and inferior shareholder returns |
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Authors: | David Yermack |
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Institution: | Department of Finance, Stern School of Business, New York University, 44 West 4th Street, Suite 9-160, New York, NY, 10012, USA |
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Abstract: | This paper studies perquisites of CEOs, focusing on personal use of company planes. For firms that have disclosed this managerial benefit, average shareholder returns underperform market benchmarks by more than 4% annually, a severe gap far exceeding the costs of resources consumed. Around the date of the initial disclosure, firms’ stock prices drop by an average of 1.1%. Regression analysis finds no significant associations between CEOs’ perquisites and their compensation or percentage ownership, but variables related to personal CEO characteristics, especially long-distance golf club memberships, have significant explanatory power for personal aircraft use. |
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Keywords: | G30 J33 |
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