The price of stock always fluctuates if it is actively being traded. Often, volatility depends on the news about a company. People run companies. People gets old, people get sick, or people may encounter accidents. These sudden and unexpected news on the demise or death of a CEO, it’s chairman, or it’s founder could have an effect on the company. Is the price of a stock easily gets affected by the death of a company chief executive? We will check the effect of sudden CEO death on stock price of a company.
Based on studies, the impact of CEO death in a company’s stock price has increased, compared to prior decades. Based on comparative studies done by Quigley and Campbell of University of Georgia, there is a significant positive impact on the price of a stock in general when a CEO of a publicly traded company dies. The price fluctuation tends to push prices of the stuck upward, even it is a bad news to the family. and friends of the CEO that passed away. There are times the news about the death pushes the price downwards. It can be noted that the passing away of the leader of the company means a loss of the “face of the company” since CEOs being founders of such businesses represents the company to the public. We will compare the effects of sudden CEO death on stock performance in the Philippines.
Some Charts on the Effect of Sudden CEO Death on Stock Price
April 16, 2017 – Yuchengco
Alfonso Yuchengco has passed away at the age of 94.He was the honorary chairman of the board of MICO Equities, chairman of Pan Malayan Management and Investment Corporation (PMMIC), and chariman the Yuchengco Group of Companies (YGC). We will look at the chart of RCBC after the announcement of the incident. The stock is evidently become uptrend.
November 23, 2018 – Ty
Dr. George S.K. Ty was the Metrobank founder and Group Chairman. Ty founded Metrobank in 1962, turning it into one of the biggest banks in the Philippines. After his passing in November 23, 2018. Metrobank stock surged. Although the stock is already looking uptrend before November 23, 2018 news, the effect was somehow positive.
January 19, 2019 – Sy
Henry Sy passed away at age 94, and was announced as of writing. From the humble beginning as a shoe seller, Mr. Sy left a legacy of building the biggest retail business in the Philippines. SM Investments Inc. includes SM Prime Holdings or SMPH as listed in the stock market, SM Retails Inc., and BDO Unibank Inc. or BDO as listed in PSE. The price movement is still awaited when market resumes on Monday January 21, 2019.