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The Wall Street Journal [subscription required] details some fascinating research on how activities in a CEO's private life affect his or her company's profitability or stock price. The most useful idea here is that investors can use Google Inc.'s (NASDAQ: GOOG) Google Earth to spot short selling opportunities.
One aspect of this research that did not surprise me was that if the CEO builds a huge home -- greater than 10,000 square feet -- the company's stock price declines. I have long noticed that when a company builds a huge new corporate headquarters building or names a sports stadium after itself, trouble often follows for investors in its stock. The reason for this link? The CEO is more focused on personal glorification than on expanding profits.
But what I found surprising and intrusive was that deaths in a CEO's family influence company profitability, according to a study by Danish researchers of 75,000 companies there. Here's the post-event change in return on assets of various deaths in a CEO's family:
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