COVID-19 and the Value of CEOs

This paper studies the effect of the number of cases of COVID-19 on stock returns from over 3,500 publicly listed firms headquartered across 167 regions in 10 European countries. We instrument the number of cases per million inhabitant in each region with its population, density, and the soccer games celebrated in the region. Regions that hosted a soccer match during March show 30% more accumulated cases of COVID-19 in the same month. Within the same country and industry, an increase in the number of instrumented cases per million people in the region during March implies a decrease in stock returns over March and April. The market discount increases significantly among firms managed by CEOs 60 years and older. Overall, we interpret this as evidence of the market anticipating the potential loss of firm value in the event of the CEO dies of COVID-19.