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NEW YORK (AP) - Investors looking for stock-picking tips might find the answer right at home — not their own, but where CEOs live.
A new study makes the case that there is a strong correlation between executives' home buying behavior and stock performance. The bigger the CEO home, the worse the company's stock fares, according to two academic researchers. They also found that companies with CEOs living in more modest abodes often see their shares outperform.
Arizona State University's Crocker Liu and New York University's David Yermack, who teach finance at their respective schools, contend that a super-sized home purchase shows entrenchment. A CEO might feel secure in his position, and therefore isn't concerned that he is going to have to leave any time soon.
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