Devoting Loads Of Time To Golf Swing Does Not Translate To Robust Earnings: Science

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Academics Lee Bickerstaff (Miami University), David C. Cicero (Univ. of Alabama) and Andy Puckett (Univ. of Tennessee, Knoxville) analyzed data from a variety of sources to demonstrate that “CEOs that golf frequently (i.e., those in the top quartile of golf play, who play at least 22 rounds per year) are associated with firms that have lower operating performance and firm values. Numerous tests accounting for the possible endogenous nature of these relations support a conclusion that CEO shirking causes lower firm performance. We find that boards are more likely to replace CEOs who shirk, but CEOs with longer tenures or weaker governance environments appear to avoid disciplinary consequences.” [...] James Cayne, the former CEO of Bear Stearns, is a classic example of the golf-shirking CEO. The Wall Street Journal reported that Cayne played golf or bridge on 10 of 21 working days in July 200, which was the month that two Bear Sterns hedge funds collapsed (Kelly, 2007) and the financial crisis began in earnest. [ValueWalk]

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