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We provide the first evidence on the efficacy of long-distance working arrangements between CEOs and firms. Long-distance CEOs underperform according to operating performance, insider reviews, and announcement returns to CEO departures. These effects are stronger when the CEO’s commute is longer and crosses multiple time zones. Using the quality of schools available to the CEO’s children as an instrument for the decision to commute, we argue that these effects are causal. CEOs’ private costs of working remotely have long-run effects on their strategic decisions and on the future of their firms. Remote CEOs are 60% more likely to sell their firm to an acquirer, and they do so at bargain prices.

Authors: Ran Duchin and Denis Sosyura

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