General revealed preference tests of weak separability and utility maximization with incomplete adjustment

Per Hjertstrand, James L. Swofford and Gerald A. Whitney

Boards hire and fire CEOs based on imperfect information. Using comprehensive data on 28 cohorts in Sweden, we analyze the role of a potentially important unobserved attribute - CEO health - in corporate governance. We find CEOs are significantly healthier than the population and other highskill professionals, in particular in mental health. Health at appointment predicts turnover, suggesting boards respond to health problems and correct mismatches that occurred at the time of appointment. Health-related corporate governance appears to work imperfectly, however, as we find CEO health also associates with firm policies requiring an active CEO role.

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Year of publication:	March 25, 2020
Authors:	Hjertstrand, Per ; Swofford, James L. ; Whitney, Gerald A.
Publisher:	Stockholm, Sweden : Research Institute of Industrial Economics
Subject:	Aggregation \| Incomplete Adjustment \| Revealed Preference \| Weak Separability \| Nutzen \| Utility \| Offenbarte Präferenzen \| Revealed preferences \| Konsumtheorie \| Consumption theory \| Präferenztheorie \| Theory of preferences