Check Out Real Estate When Investing in Stocks…

July 2007
Journal of Financial Planning;Jul2007, Vol. 20 Issue 7, p10
Academic Journal
The article focuses on the correlation of a company's stock and the chief executive officer's home. It states that professors David Yermack from New York University and Crocker Liu of Arizona State discovered that when chief executive officers at Standard & Poor's 500 companies purchase larger or more expensive trophy homes their company's stock declined or lagged. It mentions that shorting sales of these companies returned 29% after one year, and 46% after two years. It suggests that investors should be cautious if the chief executive officer is using company stocks or exercising options to finance the home.


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