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July 24, 2008 10:39:48 PM CDT

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Stocks Swing on CEO House Size

Posted Apr 13, 07 1:55 PM CDT in Business 

(Newser) – Don't buy stock in a company whose CEO lives in a huge house, a new study says.  CEOs who move into regular-sized digs —5,600 square feet for the typical company head — see their company's stock jump an average 6% the following year. Those who go palatial — 10,000 square feet or more — watch stocks dip by an average of 1.7%.

Authors Crocker Liu and David Yermack speculate that a big-ticket purchase may be a signal of an exec who is overly secure in her position . Or it may point to something more insidious, like a pretext for dumping shares . Bottom line for investors: When your neighborhood CEO decides to move on up, it's time to start shorting.

Source San Jose Mercury News

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A bad sign?   ((c) kurmbox)
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