CEO DIVORCE AND FIRM OPERATING PERFORMANCE

We examine how CEO divorce affects firm operating performance. To this end, we use population-level data of CEOs in Denmark over the 2000-2012 sample period. Applying a difference-in-differences research design, we study matching pairs of firms with married and divorcing CEOs. We find that CEO divorce is associated with significant underperformance-as measured by operating return on assets (OROA) and industry -adjusted OROA-but only under specific circumstances: in small firms, in high-growth industries, when children are present in the CEO household, and when the income differ-ence between the CEO and spouse is high. Overall, in addition to social implications, we find that CEO divorce can have significant economic ramifications for firms.