Abstract
I find that about 8.5% of firms in the sample of S&P 1500 firms are run by CEOs with a law degree (lawyer CEOs) and these firms have higher stock market liquidity than non-lawyer run CEO firms. I also find stock market liquidity improves following the appointment of lawyer CEOs. Lawyer CEOs improve stock market liquidity because they improve the firm’s information environment and reduce firm risk. Firms led by CEOs with legal expertise are associated with less stock price delay, weaker market reactions to corporate earnings announcements, and lower insider trading profits. Overall, this paper highlights the importance of CEO characteristics in enhancing financial market quality.
Published Version
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