The Advisors' Blog

– Broc Romanek

As reported in this CNBC article (also see this Business Insider article) – a study investigated the relationship between CEO leisure time & company performance. Using golf as a proxy for leisure time activity, this study examined the US Golf Association records of 363 S&P 1500 CEOs over a four-year period. The study claims that more time spent on the golf course leads to lower performance & market valuations. Here’s an excerpt from the “Business Insider” article:

– Companies with CEOs in the top quartile of golf play (22 rounds or more per year) have lower operating performance and firm values

– Some CEOs in the database played more than 100 rounds in a year! (There are 365 days in a year)

– “While some golf rounds may serve a valid business purpose, it is unlikely that the amount of golf played by the most frequent golfers is necessary for a CEO to support her firm”

– CEOs play more golf the longer they are the CEO

– The number of golf rounds a CEO plays is negatively correlated with changes in firm profitability

– Overall, higher golf play is associated with a higher probability of CEO turnover

– One CEO played 146 rounds of golf in a year