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Cristian, Baú Dal Magro, Carlos Klann Roberto, and Edy Dagnoni Mondini Vanessa. "CEOs' extensive term of office inhibits discretionary accruals." RAUSP Management Journal 53, no. 4 (2018): 575–96. https://doi.org/10.1108/RAUSP-06-2018-0033.
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Purpose – CEOs’ (chief executive officer) term of office may explain discretionary accruals as a result of opportunistic behavior arising during certain periods of the term of office. Therefore, CEOs, in their early years of office, have incentives to report results that meet market expectations. In turn, CEOs in their senior year may be motivated to use discretionary accruals to gain private benefits. In this scenario, corporate governance mechanisms play an important role in monitoring relationships. Hence, the purpose of this study is to verify the influence of monitoring mechanisms on the relationship between CEOs’ term of office and discretionary accruals. Design/methodology/approach – Descriptive statistics, multiple cross-sectional regression to estimate the accruals and regression of panel data to test the hypotheses were used. The sample comprised 195 companies listed on BM&FBovespa. Findings – The results indicated that CEOs’ long term of office has a negative impact on the level of discretionary accruals, and thus, Brazilian CEOs with a longer term of office tend to establish a certain reputation in the stock market. On the other hand, it is concluded that CEOs’ intentions, in the first years of term, are positively related to the use of accruals and that the monitoring mechanisms can minimize these CEOs’ opportunistic practices. Originality/value – The results broaden the literature on corporate governance, pointing that different systems of variable remuneration may influence CEOs’ willingness to manage results in their last year of term
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Dal Magro, Cristian Baú, Roberto Carlos Klann, and Vanessa Edy Dagnoni Mondini. "CEOs’ extensive term of office inhibits discretionary accruals." RAUSP Management Journal 53, no. 4 (2018): 575–96. http://dx.doi.org/10.1108/rausp-06-2018-0033.
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PurposeCEOs’ (chief executive officer) term of office may explain discretionary accruals as a result of opportunistic behavior arising during certain periods of the term of office. Therefore, CEOs, in their early years of office, have incentives to report results that meet market expectations. In turn, CEOs in their senior year may be motivated to use discretionary accruals to gain private benefits. In this scenario, corporate governance mechanisms play an important role in monitoring relationships. Hence, the purpose of this study is to verify the influence of monitoring mechanisms on the relationship between CEOs’ term of office and discretionary accruals.Design/methodology/approachDescriptive statistics, multiple cross-sectional regression to estimate the accruals and regression of panel data to test the hypotheses were used. The sample comprised 195 companies listed on BM&FBovespa.FindingsThe results indicated that CEOs’ long term of office has a negative impact on the level of discretionary accruals, and thus, Brazilian CEOs with a longer term of office tend to establish a certain reputation in the stock market. On the other hand, it is concluded that CEOs’ intentions, in the first years of term, are positively related to the use of accruals and that the monitoring mechanisms can minimize these CEOs’ opportunistic practices.Originality/valueThe results broaden the literature on corporate governance, pointing that different systems of variable remuneration may influence CEOs’ willingness to manage results in their last year of term.
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Brauer, Matthias F. "THE EFFECTS OF SHORT-TERM AND LONG-TERM ORIENTED MANAGERIAL BEHAVIOR ON MEDIUM-TERM FINANCIAL PERFORMANCE: LONGITUDINAL EVIDENCE FROM EUROPE." Journal of Business Economics and Management 14, no. 2 (2013): 386–402. http://dx.doi.org/10.3846/16111699.2012.703965.
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Short-term orientation aimed at maximizing quarterly results at the expense of long-term corporate performance and survival has become severely criticized. In the face of continuously decreasing chief executive officer (CEO) tenure, CEOs, however, seem to have few incentives to embrace long-term oriented behaviour. Instead, the question of foremost importance to self-interested CEOs is whether short-term orientation already harms financial performance in the three to four years of their own tenure, and whether CEOs stand a chance of benefiting from long-term orientation while still in office. CEOs thus face an intriguing ethical dilemma between optimizing their financial pay-off within their own tenure and securing the longer-term well-being of the corporation, its employees, and other major stakeholders. Consequently, our longitudinal study focuses on the medium-term performance implications of short-term and long-term orientation in Europe's largest publicly listed companies. Results indicate that short-term orientation negatively impacts on medium term performance while long-term oriented behavior is positively associated with corporate performance in the medium term. Our findings advance managerial myopia theory, and provide insights into one of the most central ethical dilemmas faced by corporate executives today.
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Campbell, Cynthia J., Rosita P. Chang, Jack C. DeJong, Robert Doktor, Lars Oxelheim, and Trond Randøy. "The Impact of CEO Long-term Equity-based Compensation Incentives on Economic Growth in Collectivist versus Individualist Countries." Asian Economic Papers 15, no. 2 (2016): 109–33. http://dx.doi.org/10.1162/asep_a_00432.
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This study examines the impact of the prevalence of long-term equity-based chief executive officer (CEO) compensation incentives on GDP growth, and we address the moderating role of individualist versus collectivist cultures on this relationship. We argue that long-term incentives given to CEOs in some firms may convey to other CEOs that they too may be able to receive such incentives and rewards if they emulate the incentivized and rewarded CEOs. In a longitudinal study across 22 nations over a 5-year period, we find that the higher proportion of CEOs in a country are awarded long-term equity-based incentive compensation, the greater future real GDP growth, particularly in collectivist countries.
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Osazevbaru, H. O., C. O. Omokhuale, and G. A. Isiaka. "Does Chief Executive Officer Behavioural Competence affect Firm Performance? Evidence from Nigerian Microfinance Subsector." Global Journal of Finance and Business Review 7, no. 1 (2024): 21–39. https://doi.org/10.5281/zenodo.10666606.
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<em>The behaviour of Chief Executive Officers (CEOs) can impact on the long-term strategy of a firm and is responsible for instilling brand values in employees. CEOs behave to make something happen, to make something change or to keep things the same in order to improve firm performance. Thus, this study examined CEO behavioural competence and firm performance. Specifically, the study examined the effect of receptiveness, adaptability and motivation as dimensions of CEO behavioural competence on firm performance. To facilitate empirical investigation, primary data was collected using structured validated questionnaire. Descriptive survey design was adopted with a sample size of 170 senior staff randomly selected from microfinance banks operating in Delta and Edo states -Nigeria. The findings of the study revealed that there was a significant positive effect of all proxies of CEO behavioural competence on firm performance. It was recommended among others that CEOs should maintain behavioural competence as this will enable quick response to the dynamic business environment.</em>
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Liden, Robert, Pingping Fu, Jun Liu, and Lynda Song. "The influence of CEO values and leadership on middle manager exchange behaviors." Nankai Business Review International 7, no. 1 (2016): 2–20. http://dx.doi.org/10.1108/nbri-12-2015-0031.
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Purpose – The purpose of this paper is to examine the extent to which chief executive officer (CEO) transactional and transformational leader behaviors as well as CEO self-enhancing versus self-transcendent values permeate through the organization to influence middle-level managers. Design/methodology/approach – Using a multi-level longitudinal design, the authors collected self-reported value data from 32 CEOs and 119 top management team (TMT) members rated their CEOs on transactional and transformational leader behaviors at Time 1; 18 months later, TMTs rated the in-role behaviors and organizational citizenship behaviors (OCBs) of 331 mid-level managers. Also, at Time 2, mid-level managers evaluated their relationship with the organization in terms of economic and social exchange. HLM was used to analyze the data. Findings – The authors found the positive relationship between transactional CEO leader behaviors and mid-level manager in-role behaviors to be enhanced when CEOs hold self-transcendent values, whereas this relationship was weakened by CEO self-enhancing values. Similarly, the relationship between CEO transformational leader behaviors and mid-level manager OCBs was found to be strengthened when leaders espoused self-transcendent values. Finally, the authors found that economic exchange mediated the relationship between the transactional leadership * self-enhancing values interaction term and mid-level manager in-role behaviors. Similarly, social exchange mediated the relationship between the transformational leadership * self-transcendent values interaction term and mid-level manager OCBs. Originality/value – Leadership/OB.
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Akono, Henri. "Managerial equity incentives and anti-dilutive convertible debt decisions." Review of Accounting and Finance 17, no. 3 (2018): 341–58. http://dx.doi.org/10.1108/raf-12-2016-0201.
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PurposeThis paper aims to examine whether high equity incentives motivate executives to avoid issuing convertible debt and/or to design convertible debt issues as anti-dilutive to earnings-per-share (EPS).Design/methodology/approachTests are conducted using the Heckman two-step probit model to control for potential self-selection bias between firms that issue straight debt and those that issue convertible debt. Further, analyses are conducted separately and jointly for the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) to assess the differential impact of CEOs’ and CFOs’ equity incentives on convertible debt issuance and design decisions.FindingsFirms are more likely to design convertible debt issues as anti-dilutive to EPS when CFOs have high levels of equity incentives, but only when the firm stock price is sensitive to diluted EPS. High CEOs’ equity incentives have limited impact of convertible debt issuance and design decisions.Research limitations/implicationsThe main limitation of this study is the generalizability of the findings and implications of this study due to the smaller sample size of convertible debt issues.Originality/valuePrior research has shown that bonus incentives influence CEOs with disincentive for EPS dilution and motivate them to make anti-dilutive financing decisions. Further, there is evidence that high equity incentives motivate CEOs to manage earnings to boost short-term prices. This study extends prior literature by showing that high equity incentives provide executives with disincentive for EPS dilution and motivate CFOs to design convertible debt issues as anti-dilutive to EPS possibly to avoid reduced stock prices. Further, this study shows that CFOs have greater influence over convertible debt design choices than CEOs do.
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Cao, Xian, Junyon Im, and Imran Syed. "A Meta-Analysis of the Relationship Between Chief Executive Officer Tenure and Firm Financial Performance: The Moderating Effects of Chief Executive Officer Pay and Board Monitoring." Group & Organization Management 46, no. 3 (2021): 530–63. http://dx.doi.org/10.1177/1059601121989575.
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Prior empirical research investigating the relationship between chief executive officer (CEO) tenure and firms’ financial performance has shown inconclusive results. Based on arguments of agency and behavioral agency theories, we suggest that this relationship is nuanced and may vary depending on CEO pay and board monitoring. In response to these arguments, we meta-analytically test 385 studies ( n = 1,029,602). We find that CEO tenure is positively related to firms’ financial performance. This positive relationship is enhanced when CEOs receive higher cash compensation or hold more stock ownership. On the other hand, the above positive relationship becomes weaker when CEOs receive higher long-term incentives or when the firm has more independent board directors. These findings suggest that CEO pay and board monitoring, or agency mechanisms in general, can offer new research avenues to help explore boundary conditions of the CEO tenure and firms’ financial performance relationship.
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CHERKASOVA, V. A., and A. V. PETROV. "THE INFLUENCE OF CEO'S CHARACTERISTICS ON ESG RATING AND EFFICIENCY OF GOLD MINING COMPANIES." Lomonosov Economics Journal, no. 5_2023 (May 21, 2024): 184–208. http://dx.doi.org/10.55959/msu0130-0105-6-58-5-9.
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This study examines the role of the CEO in implementing ESG policy, which results in the growth of ESG rating and improving the efficiency of gold mining companies. The research analyses the indicators of CEO power, such as: the amount of CEO remuneration; the share of company stocks owned by him; the term of office. The general index of CEO authority is derived by combining individual characteristics. The methodology used is an econometric analysis of panel data on 36 of the world's largest public gold mining companies for the period from 2015 to 2020. The efficiency of gold mining companies is measured using a market indicator - Tobins'Q, which allows you to make a decision about investing in an enterprise aimed at sustainable development. Gold mining companies successfully implement ESG projects and become a full-fledged object for investment. The results of the study show that ESG rating and its three components (environmental, social and managerial) have a positive impact on the market efficiency of gold mining companies. Of the considered characteristics of CEOs, two of them - the amount of CEO remuneration and the percentage of shares ownership, have a positive impact on the market efficiency of companies. The term of office does not have a significant impact on the effectiveness of companies. The overall indicator of authority contributed to the increase in efficiency due to two characteristics. If we consider the CEO as an intermediary between investing in ESG projects and increasing the company's efficiency, it turned out that only an influential CEO, characterized by a high amount of remuneration, can contribute to increasing the ESG rating and improving the company's market efficiency. The findings illustrate the peculiarities of the influence of the CEO's characteristics on the performance of gold mining companies, taking into account the principles of ESG. The results of the study will improve corporate governance of gold mining companies to ensure the growth of performance indicators, taking into account the specificity of the industry and its focus on sustainable development.
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Nashilyo, Maria Magano, Timothy Masuni Nagriwum, and Anita Nti-Kwakye. "Effects of CEO Tenure and Education on Corporate Social and Environmental Performance: Evidence from Listed Firms on Namibia Stock Exchange." American Journal of Environmental Economics 3, no. 1 (2024): 59–69. http://dx.doi.org/10.54536/ajee.v3i1.2592.
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Given the increasing focus on sustainability and corporate responsibility, it is essential to comprehend the influence of CEO characteristics on the accomplishment of a company. The main objective of this research is to investigate the correlation between the length of time a CEO serves in their position, their level of education, company corporate social performance, and environmental performance. The study utilized a descriptive research design, employing a quantitative method by conducting a cross-sectional survey. The study sample comprised Chief Executive Officers (CEOs) from 52 publicly traded businesses, and the analysis was based on 39 collected responses. With the help of SPSS, a multiple regression analysis was performed to evaluate the influence of CEO term of office and education on business social performance and environmental performance. The results indicate that CEO tenure has a favorable and substantial influence on environmental performance, whereas CEO education substantially influences corporate social performance. The results offer useful insights into the complex correlation between CEO characteristics and sustainability success. We propose policymakers to implement restrictions or recommendations for the length of time a CEO can hold their position and their educational qualifications. This will help ensure the efficient management of social and environmental responsibilities. Moreover, providing incentives for CEOs and high-level executives to participate in continuous education and training programs could boost their comprehension of social and environmental matters, ultimately leading to the implementation of enhanced sustainability practices within organizations.
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Prugsamatz, Nicolette Chatelier. "CEO dominance and firm innovation effort." Managerial Finance 47, no. 7 (2021): 998–1015. http://dx.doi.org/10.1108/mf-05-2020-0235.
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PurposeThe purpose of this paper is to investigate whether innovation effort is lower for firms exhibiting signs of higher chief executive officer (CEO) dominance and whether such CEOs can be incentivized to pursue risky ventures such as innovation projects in line with shareholder's interests that are geared toward the long-term growth of the firm.Design/methodology/approachThe paper utilizes panel data of US publicly listed companies (2007–2016) to address the influence of CEO dominance on firm innovation effort and the moderating effects of incentives in this relationship through ordinary least squares (OLS) estimations. A two-stage least squares (2SLS) technique is also employed to address possible endogeneity. As a robustness check, further analysis is conducted utilizing an alternative proxy for CEO incentive as well as Tobit analysis (with panel-level random effects).FindingsResults from both OLS and Tobit estimations offer two key findings. First, there is a significantly negative relationship between CEO pay slice and firm research and development (R&D) intensity. Second, the interaction effect of CEO incentives and CEO dominance is significant and positive.Research limitations/implicationsWhen provided with the right incentives, such as those that reward long-term performance, dominant CEOs can be incentivized to go after risky ventures like innovation projects that are crucial to promoting the long-term growth of the firm.Originality/valueThis paper utilizes R&D instead of patent outputs as proxies for innovation where the former enables studying R&D efforts for more recent periods compared to prior studies that utilize patent data.
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Wang, Changrong, Lufeng Gou, and Xuemei Li. "Is Education Beneficial to Environmentally Friendly Behaviors? Evidence from CEOs." International Journal of Environmental Research and Public Health 19, no. 18 (2022): 11391. http://dx.doi.org/10.3390/ijerph191811391.
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Corporate environmental investment decisions play a crucial role in the protection of the public environment. As the decision-maker and executor, the environmental consciousness and social responsibility of the chief executive officer (CEO) has a long-term impact on the company’s environmental protection strategy, and the CEO’s level of education is a significant factor influencing the CEO’s environmental protection decisions. In this paper, we investigate the extent to which CEO education influences environmental protection investment decisions. A CEO education index is constructed as a proxy for CEO education based on the CEO’s educational background, using a panel sample of Chinese listed firms from 2010 to 2019 and providing robust evidence supporting the notioin that firms with highly educated CEOs are likely to engage in environmental protection spending activities. However, the positive relationship between CEO education and corporate environmental protection investment is reduced when the CEO also holds the position of chairman. The heterogeneity analysis shows that the positive relationship between CEO education and corporate environmental investment behavior is stronger in non-manufacturing and highly monopolistic market competitive industries. Our study contributes to the sustainability literature by providing a new impetus for corporate environmental activities from the perspective of CEO education and sheds light on the impact of the internal and external factors of firms on the investment in environmental protection. It may also help decision makers to decide whether to hire highly educated CEOs and use a dual structure of CEOs in markets with different levels of competition.
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Ferris, Stephen P., Narayanan Jayaraman, and Sanjiv Sabherwal. "CEO Overconfidence and International Merger and Acquisition Activity." Journal of Financial and Quantitative Analysis 48, no. 1 (2013): 137–64. http://dx.doi.org/10.1017/s0022109013000069.
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AbstractThis study examines the role that chief executive officer (CEO) overconfidence plays in an explanation of international mergers and acquisitions during the period 2000–2006. Using a sample of CEOs of Fortune Global 500 firms over our sample period, we find that CEO overconfidence is related to a number of critical aspects of international merger activity. Overconfidence helps to explain the number of offers made by a CEO, the frequencies of nondiversifying and diversifying acquisitions, and the use of cash to finance a merger deal. Although overconfidence is an international phenomenon, it is most extensively observed in individuals heading firms headquartered in Christian countries that encourage individualism while de-emphasizing long-term orientation in their national cultures.
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Anyang, Imeh Archibong, and Uwem Etim Uwah. "Chief Executive Officers’ Attributes and Firms’ Value of Deposit Money Banks in Nigeria." AKSU Journal of Administration and Corporate Governance 4, no. 4 (2024): 125–41. https://doi.org/10.61090/aksujacog.2024.067.
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The chief executive officer adds to the firm’s worth as a key member of the senior management team. Using samples from deposit money banks listed on the Nigerian Exchange Group floor between 2013 and 2022, this study investigated the relationship between CEO characteristics and the firm’s value. The independent variable, Chief Executive Officers' attributes, had the CEO’s educational background, tenure in office, compensation, and gender diversity as proxies, all of which were in accordance with the principles of upper-echelon theory, which holds that businesses are reflective of the cognitive behaviours of the CEO. Firm value as determined by market capitalization served as the dependent variable. The ex post facto research design was used, and the population of this study comprised all the 13 deposit money banks listed on the floor of the Nigerian Exchange Group as of 31st December 2022. Four hypotheses were tested at the 0.05% significance level using the ordinary regression technique. The statistical package used was STATA 16, and the analysis results showed that CEO attributes have significant positive effects on the firm value of listed deposit money banks in Nigeria. Therefore, it was concluded that CEO attributes significantly affect the value of listed deposit money banks in Nigeria. It was recommended, among others, that deposit money banks should appoint CEOs with postgraduate or professional qualifications, as higher academic qualifications come with expertise and a wealth of knowledge that help the firms to be more prolific in performance.
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Uemura, Hiroshi. "Effects of CEO Turnover and Board Composition Reform on Improvements in the Internal Control Quality." International Journal of Financial Research 9, no. 3 (2018): 36. http://dx.doi.org/10.5430/ijfr.v9n3p36.
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Several serious accounting scandals have occurred in Japan in recent years (e.g., Olympus); however, the government, regulators, and auditing standard setters have struggled to identify new directions for corporate governance in listed companies, such as standard setting to address risks of fraud in an audit or the adoption of new corporate governance codes. The validity and effectiveness of monitoring by outside directors have received criticism within such a context. Nevertheless, in 2015, accounting fraud at Toshiba was discovered, which surprisingly involved upper management; the outside directors had failed to detect and prevent this fraud. Again, the monitoring function of the Japanese board of directors and outside directors was viewed with suspicion. Thus, this study examines Japanese corporations that disclose significant deficiencies (SDs) in internal controls over financial reporting (ICFR) and determines whether replacing the chief executive officer (CEO) and enhancing board members’ independence and financial expertise are followed by SD remediation. The results indicate that Japanese companies that disclose SDs in ICFR are more likely to replace their CEOs and enhance board independence. In addition, this study finds that although these actions do not affect SD remediation, upgrading the board’s accounting expertise does correlate positively with SD remediation. Moreover, if a company remediates a SD by increasing the number of accounting experts on the board, an increase in audit fees during the following term can be mitigated. These findings should be of interest to Japan’s regulators, auditing standard setters, and financial statement users when considering improvements in the quality of internal controls. In particular, these individuals must realize that the control environment is not improved in Japanese firms merely by replacing the CEO and increasing board independence, particularly because new CEOs encounter difficulties in changing the environment established by their predecessors.
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Molina, Molina, Dhieka Avrilia Lantana, Erwin Indriyanto, Kumba Digdowiseiso, and Zalailah Salleh. "A Review of Chief Executive Officer Behavioral Aspects and Company Performance in Indonesia Literature." Global Journal of Business, Economics & Social Development 1, no. 2 (2023): 85–90. http://dx.doi.org/10.56225/gjbesd.v1i2.11.
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his study aims to comprehend the aspects of CEO personality and behavior on company performance in Indonesia. This study uses a Systematic Literature Review (SLR), which involves an in-depth analysis of relevant literature topics. This study found that CEOs who hold ethical leadership and are committed to the principles of good governance tend to create a work environment that is transparent and with integrity. A work culture that values honesty and accountability motivate employees, increases shareholder trust, and contributes to the company's growth. Ethical leadership, integrity, and commitment to the principles of good corporate governance are considered to have a positive impact on company performance. Besides that, less ethical and self-interest-oriented behavior can have a negative impact. However, CEO behavior that is less ethical, authoritarian, or overly self-interest-oriented can have negative repercussions, including manipulation of financial statements and conflicts of interest. We concluded that the CEO has a significant role in influencing the performance of companies in Indonesia. The development of ethical leadership, integrity, and commitment to the principles of good corporate governance are key to achieving sustainable corporate performance. The role of a responsible and integrity CEO establishes a work culture oriented towards honesty, transparency, sustainable performance and long-term success of companies in Indonesia.
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Yahya, Farzan, Ghulam Abbas, Ammar Ahmed, and Muhammad Sadiq Hashmi. "Restrictive and Supportive Mechanisms for Female Directors’ Risk-Averse Behavior: Evidence From South Asian Health Care Industry." SAGE Open 10, no. 4 (2020): 215824402096277. http://dx.doi.org/10.1177/2158244020962777.
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This article aims to understand the impact of gender diversity on a firm’s equity volatility along with the moderating effect of chief executive officer (CEO) pay–performance sensitivity, institutional activism, and corporate social responsibility (CSR) activities. The sample consists of 200 South Asian health care firms over the period 2010 to 2018. After confirming the prevalence of endogeneity, we rely on the results of system generalized method of moments (GMM) rather than any static model. The results show that a higher representation of women on the board can mitigate the firm’s equity volatility. The findings of the study also purport that CEOs with higher pay–performance sensitivity exploit female directors to take the excessive risk, whereas institutional investors support the risk-averse behavior of these directors. However, we find no statistical evidence that CSR activities moderate the relationship between gender diversity and firm’s equity volatility. Our results theoretically support both stakeholder and agency perspectives that South Asian capital markets should enhance the representation of women on board to mitigate agency conflicts and to improve long-term firm’s sustainability.
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Tsourdi, Evangelia (Lilian). "Holding the European Asylum Support Office Accountable for its role in Asylum Decision-Making: Mission Impossible?" German Law Journal 21, no. 3 (2020): 506–31. http://dx.doi.org/10.1017/glj.2020.21.
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AbstractThe Common European Asylum System (CEAS) seeks to harmonize national asylum procedures. The initial implementation design of the CEAS, reflective of the theory of executive federalism, foresaw that national authorities were to conduct asylum processing and implement the harmonized norms. The implementation design of the EU asylum policy has, nevertheless, started to shift. An integrated European administration is emerging. One area this is pronounced in is asylum decision-making, where patterns of joint implementation have surfaced. This term broadly refers to staff and experts deployed by the European Asylum Support Office (EASO), an EU agency, working alongside national administrators, including on the processing of asylum claims. This Article scrutinizes the emergence of joint implementation patterns in EU asylum policy and the resulting accountability challenge, drawing both from legal analysis and political science theories. I also refer to administrative practice as documented in secondary sources. EASO is currently subject to a mosaic of accountability processes. Two main pitfalls emerge: the intricate balance between accountability and independence; and accessibility for the individual. Against this backdrop, I focus on extra-judicial accountability through the European Ombudsman which, combined with the envisaged internal “individual complaints mechanism” within EASO, could go some way in ensuring applicants’ procedural rights.
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Basuroy, Suman, Kimberly C. Gleason, and Yezen H. Kannan. "CEO compensation, customer satisfaction, and firm value." Review of Accounting and Finance 13, no. 4 (2014): 326–52. http://dx.doi.org/10.1108/raf-11-2012-0120.
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Purpose – The purpose of this article is to examine whether the design of chief executive officer (CEO) compensation generates incentives to engage in managerial behavior that enhances customer satisfaction and whether these incentives, in turn, lead to higher firm value. Design/methodology/approach – A unique dataset combining customer satisfaction and executive compensation data was used, and the relationship between option sensitivity, customer satisfaction and performance was modeled using simultaneous equations modeling with industry and year fixed effects. Findings – Findings suggest that CEO compensation plays an important role in explaining the variation in customer satisfaction and firm value. Specifically, CEO short-term compensation (salary or bonus) has no affect on customer satisfaction or firm value; the sensitivity of CEO wealth from long-term incentive compensation to stock price changes is positively related and also exhibits an inverted U-shaped relationship with customer satisfaction; the sensitivity of CEO wealth from long-term incentive compensation to stock price changes interacts negatively with CEO longevity and industry concentration but positively with advertising expenses in affecting customer satisfaction; the sensitivity of CEO wealth from long-term incentive compensation to both stock price changes and customer satisfaction positively affect firm value; and the sensitivity of CEO wealth from long-term incentive compensation to stock price changes interacts positively with customer satisfaction to affect firm value. Research limitations/implications – This study suffers from several limitations. First, the sample is limited to firms with ACSI scores available. Second, this study is limited to only publicly traded firms, which limits our ability to generalize regarding customer satisfaction, option sensitivity and firm value. Practical implications – This study has several important implications for researchers and managers. The first is that the corporate board appears to view investment in customer satisfaction as similar to an investment in other intangible assets or technology, in that they reward managers with a nonlinear payoff profile. To encourage managers to invest discretionary funds wisely, incentive compensation is important. Second, compensation committees of corporate boards should not allow the option sensitivity to reach extreme levels because, at some point, managers’ incentives appear to shift more toward short-term earnings objectives and away from investment in intangibles, which have a longer-term payoff. Third, if boards are concerned about customer satisfaction and market value, when designing compensation packages, they should shift their focus from the structure of pay to the sensitivity of pay to performance. The exception to this is that for CEOs with very long tenures (or for those close to retirement), high levels of option sensitivity may distort incentives away from a focus on customer satisfaction. Finally, our results indicate that strategies that enhance customer satisfaction provide an incremental benefit in terms of firm value, beyond incentive compensation strategies. Social implications – The results indicate that a “stakeholder focus” which includes customers is value adding for shareholders as well. The results also imply that perhaps using a “balanced scorecard” approach to assessing performance in terms of customer satisfaction outcomes, or at least acknowledging the drives of customer satisfaction explicitly, could be an alternative to using highly sensitive incentive-based compensation when such compensation schemes are less desirable. Originality/value – Prior research has found that the structure of fixed versus incentive-based compensation impacts customer satisfaction. However, this is one of the first papers to investigate the relationship between the sensitivity of CEO compensation and customer satisfaction. Findings have important implications for boards who seek to structure CEO pay so that CEOs have incentives to enact policies that benefit customers and, in turn, firm performance.
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Pan, Yaotian, Alain Verbeke, and Wenlong Yuan. "CEO Transformational Leadership and Corporate Entrepreneurship in China." Management and Organization Review 17, no. 1 (2021): 45–76. http://dx.doi.org/10.1017/mor.2020.59.
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ABSTRACTA chief executive officer (CEO) acting as the firm's transformational leader is typically viewed as instrumental to corporate entrepreneurship in established firms, but how exactly does a higher level of corporate entrepreneurship come about, given a transformational CEO's actions? We suggest that organizational ambidexterity can function as a core mediating mechanism between transformational CEOs and the observed level of corporate entrepreneurship and that the effectiveness of this mediating process varies as a function of critical contingencies related to characteristics of the top management team (TMT), the environment and the organization's design. Our empirical evidence, based on a sample of 145 Chinese private sector firms, and using three primary sources of data (145 CEOs, 506 TMT members, and 1,981 middle managers), provides support for a moderated mediation process. We find that the mediating pathway from transformational leadership to corporate entrepreneurship through organizational ambidexterity is not significant when boundary conditions are ignored. However, when environmental dynamism, TMT collectivism, and structural differentiation are included as moderators, CEO transformational leadership does affect corporate entrepreneurship via the creation and effective functioning of organizational ambidexterity.
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Mthombeni, Admire, Obert Sifile, Faitira Manuere, Juet Nyamudzodza, and Rangarirai Mbizi. "CORPORATE GOVERNANCE REFORM AND SUSTENANCE OF STATE-OWNED ENTERPRISES (SOES) IN ZIMBABWE." Malaysian Management Journal 28 (July 31, 2024): 25–66. http://dx.doi.org/10.32890/mmj2024.28.2.
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The study sought to ascertain corporate governance reforms that foster sustenance of the SOEs in Zimbabwe and how such reforms can be implemented. This study has used a mixed-methods technique and a pragmatist philosophy. A cross-sectional survey design was employed, whereby structured questionnaires and interviews were used to collect data. Top and middle management, board members, board chairpersons, and CEOs of Zimbabwe’s SOEs made up the target population. For quantitative data, a sample size of 351 people was obtained using the sample process created by Krejcie and Morgan (1970). Interviews were done with sixteen (16) people until saturation was achieved. Stratified random sampling was used in the study to choose respondents for the quantitative data collection. To choose interview subjects for the qualitative data, purposeful sampling was applied. The quantitative and qualitative data were analyzed using SPSS version 23 and NVivo version 12, respectively. According to the study, the primary corporate governance reforms for the survival of the SOEs in Zimbabwe included the following: open nomination processes for the SOEs; removal and resignation of directors who did not comply with best corporate governance practices; limitations on board member compensation; and changes to the executive directors’ terms of service. This research has shown that best corporate governance practices in the SOEs are brought about by reforming the Board Appointments Board (RAB). In order to ensure that corporate governance reforms are implemented effectively, the present study has suggested that term limits, with a maximum of ten (10) years, in Chief Executive Officer Employment contracts be strictly enforced.
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Frey, Bruno S., and Reiner Eichenberger. "Sollen CEOs rotieren?" Die Unternehmung 75, no. 2 (2021): 271–80. http://dx.doi.org/10.5771/0042-059x-2021-2-271.
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Die Institution eines einzelnen CEO (Chief Executive Officer) hat erhebliche Schwächen. Der CEO hat andere Interessen als die Eigentümer und deren Vertreter sowie die anderen Topmanager. Einer einzelnen Person so viel Macht zuzuweisen ist riskant. Der Wechsel eines CEO verursacht hohe Kosten. Jedoch hat auch die traditionelle Alternative - ein kollektiv arbeitendes Top-Management-Team - Nachteile. Eine neue Governance-Institution - ein Team von rotierenden Chief Executive Officers - vereint die Vorteile der beiden traditionellen Modelle, ohne mit deren Nachteilen behaftet zu sein.
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Seiffert-Brockmann, Jens, Sabine Einwiller, and Julia Stranzl. "Character assassination of CEOs in crises – Questioning CEOs’ character and values in corporate crises." European Journal of Communication 33, no. 4 (2018): 413–29. http://dx.doi.org/10.1177/0267323118763860.
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This study explores the concept of character assassination in the field of corporate communication. We examine the perception of character traits and personal values of chief executive officers in Austria and Germany during corporate crises. Results suggest that character attacks mostly focus on a chief executive officer’s integrity, while a positive public perception of charisma seems to be related to a chief executive officer’s remaining in office. Furthermore, personal values were under more intense public scrutiny when the chief executive officer in question had to leave their office. Thus, the study suggests that character traits and values are antecedents which influence the outcomes of the process of character assassination.
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Graf-Vlachy, Lorenz, Jonathan Bundy, and Donald C. Hambrick. "Effects of an Advancing Tenure on CEO Cognitive Complexity." Organization Science 31, no. 4 (2020): 936–59. http://dx.doi.org/10.1287/orsc.2019.1336.
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We study how the cognitive complexity of chief executive officers (CEOs) changes during their tenures. Drawing from prior theory and research, we argue that CEOs attain gradually greater role-specific knowledge, or expertise, as their tenures advance, which yields more complex thinking. Beyond examining the main effect of CEO tenure on cognitive complexity, we consider three moderators of this relationship, each of which is expected to influence the accumulation of expertise over a CEO’s time in office: industry dynamism, industry jolts, and CEO positional power. We conduct our tests on a sample of 684 CEOs of public corporations. The analytic centerpiece of our study is a novel index of CEO cognitive complexity based on CEOs’ language patterns in the question-and-answer portions of quarterly conference calls. As part of our extensive theory of measurement, we provide evidence of the reliability and validity of our index. Our results indicate that CEOs, in general, experience substantial increases in cognitive complexity over their time in office. Examined moderators somewhat, but modestly, alter this general trajectory, and nonlinearities are not observed. We discuss the implications of our findings.
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Lai, Shufang, Zengquan Li, and Yong George Yang. "East, West, Home's Best: Do Local CEOs Behave Less Myopically?" Accounting Review 95, no. 2 (2019): 227–55. http://dx.doi.org/10.2308/accr-52555.
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ABSTRACT We test whether CEOs working near their childhood homes are less likely than nonlocal CEOs to make myopic decisions. Place attachment theories suggest that people develop mutual caretaking relationships with their birthplaces. Also, executive labor markets face less information asymmetry about local CEOs, resulting in lower pressure on local CEOs for quick profits. Consistent with the prediction, we find that local CEOs are less likely to cut R&D expenditures for beating analyst forecasts or avoiding earnings decreases. In their last year of office, local CEOs are significantly less likely to cut R&D than nonlocal CEOs. The CEO locality effect is stronger when more local business interests are embedded in the firm and when the residents of the CEO's birth state have stronger local social bonds. Local CEOs' longer horizons are consistently manifested in their other decisions, such as paying more state tax and being more socially responsible in business operation. JEL Classifications: G10; G23; M40.
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Mundi, Hardeep Singh, and Parmjit Kaur. "CEO Overconfidence and Capital Structure Decisions: Evidence from India." Vikalpa: The Journal for Decision Makers 47, no. 1 (2022): 19–37. http://dx.doi.org/10.1177/02560909221079270.
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Executive Summary Capital structure decisions are vital for firms. Existing theories on capital structure partially explain the difference in capital structure decisions of identical firms. Researchers have integrated psychology with finance in recent years to explain the difference in capital structure decisions better. To help practitioners and academicians understand the role of psychology in capital structure decisions, this article focuses on CEO overconfidence and its influence on equity versus debt financing, short-term versus long-term debt financing, and level of debt financing concerning tax shields. Indian CEOs are unique in their leadership style, values and beliefs. Overconfidence among CEOs of S&P BSE 200 firms is measured using the press coverage of CEOs, and this proxy depicts how the press portrays CEOs. An extensive search on CEOs in relevant search engines helped measure overconfidence among CEOs. The results from regression models document that overconfident CEOs prefer debt over equity and short-term debt over long-term debt. In addition, overconfident CEOs are found to not avail the full benefits of tax shield and follow a conservative debt policy. The presence of bias of overconfidence among CEOs distorts optimal decision-making and deviates capital structure decisions from trade-off theory and pecking order theory of capital structure. The evidence on external versus internal financing helps explain the biased preference of overconfident CEOs for debt and short-term financing. The biased beliefs lead CEOs to form high expectations of cash flows. Overconfidence among CEOs is found to significantly influence capital structure decisions. The robustness of the results corroborates existing findings and documents the influence of behavioural biases on corporate decision-making.
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Suherman, Suherman, Berto Usman, Titis Fatarina Mahfirah, and Renhard Vesta. "Do female executives and CEO tenure matter for corporate cash holdings? Insight from a Southeast Asian country." Corporate Governance: The International Journal of Business in Society 21, no. 5 (2021): 939–60. http://dx.doi.org/10.1108/cg-07-2020-0290.
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Purpose This paper aims to investigate the relationship between female executives, chief executive officer (CEO) tenure and corporate cash holdings in the context of the developing Southeast Asian capital market (Indonesia). Design/methodology/approach The sample was screened from 231 publicly listed companies in the Indonesian Stock Exchange. The period of observation was 2011–2017. Two measures were applied for corporate cash holdings: the ratio of cash and cash equivalent to total assets and cash and cash equivalent to net assets. Three surrogate indicators were used for female executives: female CEO, the proportion of female members in the board of management and the number of female members in the board of management. CEO tenure is the length of time a CEO has been a member of the board of management. This study uses panel data regression analysis, including the fixed effect model with clustered standard errors. Findings The empirical evidence indicates that female executives and CEO tenure are positively and negatively associated with corporate cash holdings, respectively, and both are significantly related. Additional analysis using lagged independent variables remains consistent with the main analysis, suggesting that corporate cash holding becomes higher as a female presence in the board of management increases. Research limitations/implications Empirical tests set in Indonesia suggest that female executives are more conservative and risk-averse, thereby holding more cash with a precautionary motive. The findings also imply that CEOs with long tenure focus on long-term performance such as increasing research and development investments or capital expenditure, thus holding less cash. Accordingly, policymakers and regulators should promote diversity issues proportionally and advance to the board level. Originality/value This study contributes to the field of executive and CEO studies by enriching the empirical findings in related topics. In addition, to the best of the authors’ knowledge, this is one of the first studies applying two measures of cash holdings in the setting of a developing Southeast Asian capital market (Indonesia).
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Kuang, Yu Flora, Bo Qin, and Jacco L. Wielhouwer. "CEO Origin and Accrual-Based Earnings Management." Accounting Horizons 28, no. 3 (2014): 605–26. http://dx.doi.org/10.2308/acch-50810.
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SYNOPSIS This study examines the influence of CEO origin on accrual-based earnings management and how these effects evolve over the CEO's tenure in office. Compared with CEOs promoted from within the company, CEOs recruited from outside have a stronger incentive to demonstrate their abilities in the initial years after their appointment; these outside CEOs also may have a lower expectation of surviving the short run. We predict and find that outside CEOs engage in greater income-increasing manipulation in the early years of their tenure. However, the differences in earnings management practices become insignificant after CEOs survive the short run. Our results are robust to a variety of alternative hypotheses and sensitivity checks. The findings thus show that CEO origin is an important factor for explaining financial reporting strategies; they also add to our understanding of CEO origin, managerial horizon problems, and the determinants of aggressive accounting. Data Availability: The data used in this study are publicly available from the sources indicated in the text.
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Zheng, Wei, Rui Shen, Weiguo Zhong, and Jiangyong Lu. "CEO Values, Firm Long-Term Orientation, and Firm Innovation: Evidence from Chinese Manufacturing Firms." Management and Organization Review 16, no. 1 (2019): 69–106. http://dx.doi.org/10.1017/mor.2019.43.
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ABSTRACTInnovation contributes to a firm's long-term competitive advantages but also involves significant risk and uncertainty. As agency theory predicts, CEOs are self-interested and risk-averse, and thus are reluctant to engage in innovation investments. However, the extent to which CEOs are self-interested and the mechanisms through which self-interested CEOs affect firm innovation have not been empirically tested. To fill this gap, we propose that CEOs possess a mix of both self-preserving and other-regarding motives, and build a mediation model in which CEO values affect firm innovation via firms’ long-term orientation. Based on a three-phase (from 2014 to 2016) survey of 436 Chinese manufacturing firms, we find that CEOs with high self-regarding values reduce innovation efforts and performance by damaging a firm's long-term orientation. Moreover, CEO tenure, CEO duality, and environmental uncertainty weaken the relationship between CEO values and firm innovation via long-term orientation. Our study enriches the innovation literature by extending the basic assumptions of agency theory and by providing empirical evidence to determine whether and how self-regarded CEOs affect firm innovation.
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Rhee, Chang Seop, and Boyoung Moon. "New Chief Executive Officers Earnings Forecasts Bias At Their First Year Term And Role Of Financial Analysts: Korean Evidence." Journal of Applied Business Research (JABR) 31, no. 4 (2015): 1267. http://dx.doi.org/10.19030/jabr.v31i4.9300.
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This study investigates newly appointed Chief Executive Officers (CEOs) earnings forecasts bias at their first year term using listed firm data in Korea. Prior literature reports that new CEOs prefer to report low earnings (big bath or cookie jar accounting) at their first year term for the purpose of income smoothing. However, it is hard to find the studies about new CEOs earnings forecasts bias at the term of low earnings reporting incentive. We question what earnings forecasts bias they usually have when they are interested in low earnings reporting.From the empirical tests, we find that newly appointed CEOs tend to provide conservative (negative) forecasts instead of optimistic (positive) forecasts at their first term. Furthermore, we find that greater analyst following helps to relieve the negatively biased earnings forecasts of new CEOs.This study will contribute to academics and disclosure-related practitioners by documenting about newly appointed CEOs earnings forecasts bias. We also believe that our empirical evidence will be helpful to market participants when they make a business decisions in case of CEO turnover.
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Karayalcin, Saltuk. "The Effect of Family vs. Non-Family CEOs on Product Innovation in Turkish Family Businesses." Administrative Sciences 15, no. 6 (2025): 200. https://doi.org/10.3390/admsci15060200.
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Family businesses are a significant part of the global economy, yet defining them and understanding their features remains a topic of debate. Despite the suggestion that family ownership may lead to conservative innovation strategies, recent research indicates that family businesses can embrace strategic risk in innovation. Governance of innovation in family firms is a growing area of interest, with corporate governance influencing R&D and innovation decisions. The role of CEOs in family businesses is critical for innovation strategies, with family CEOs often prioritizing long-term interests. However, research on innovation in Turkish family businesses is lacking, offering an open area for exploration. This article investigates the influence of CEO type (family vs. non-family) on product innovation, innovation management processes, strategic decision-making, risk-taking behaviors, technology adoption, and emotional attachment within Turkish family businesses. A survey methodology was employed, reaching out to Turkish family businesses with a CEO involved in product innovation. The study found that, while family CEOs exhibit a stronger emotional attachment compared to non-family CEOs, there was no significant difference in the perceived influence of CEOs on product innovation. Non-family CEOs were not significantly more likely to implement formal innovation management processes or prioritize long-term strategic goals over short-term profits. Similarly, there was no significant evidence supporting the notion that non-family CEOs are more likely to engage in risk-taking behaviors compared to family CEOs. The study suggests a need for further research using a larger sample and diverse methodologies to deepen understanding of family business dynamics, particularly in the context of innovation.
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Seo, Kwanglim, Ellen Eun Kyoo Kim, and Amit Sharma. "Examining the determinants of long-term debt in the US restaurant industry." International Journal of Contemporary Hospitality Management 29, no. 5 (2017): 1501–20. http://dx.doi.org/10.1108/ijchm-06-2015-0274.
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Purpose This paper aims to find alternative explanations for the use of long-term debt in the US restaurant industry from a behavioral perspective. The three-fold purpose of the present study is to examine the impact of CEO overconfidence on the use of long-term debt; explore how CEO overconfidence moderates the relationship between growth opportunities and long-term debt; and analyze the moderating role of CEO overconfidence based on cash flow levels in the context of the restaurant industry. Design/methodology/approach Using a sample of publicly traded US restaurant firms between 1992 and 2015, this study used generalized methods of moments with instrumental variable technique to analyze the panel data. Findings The findings of this study highlight the importance of considering behavioral traits of CEOs, such as overconfidence to better understand the US restaurant firms’ financing behaviors. This study found that overconfident CEOs tend to use more long-term debt when firms have greater growth opportunities and low cash flow. Practical implications Given that psychological and behavioral features of CEOs are critical in understanding the variations in corporate financing decisions and capital structure, shareholders and boards of directors of growth-seeking restaurant firms should incorporate the behavioral aspects of overconfident CEOs in the design of long-term debt contracts to mitigate liquidation risk while developing compensation practices that encourage overconfident CEOs to finance growth. Originality/value Despite its heavy reliance on long-term debt in the US hospitality industry, prior studies provided mixed findings for the determinants of long-term debt. This study makes a contribution to the literature by offering alternative approaches to examining long-term debt decisions among US restaurant firms.
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STANFAST, SUOTONYE BARNABAS, and LAWRENCE APOH MARIAN. "Chief Executive Officer with Machiavellianism Trait and Survival of Family-owned Businesses in South-South, Nigeria." International Journal of Science and Business 5, no. 1 (2021): 14–29. https://doi.org/10.5281/zenodo.4409128.
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Family-owned businesses (FOBs) are seen as a major contributor to economic growth and development in the global economy. It has nothing to do with the important role they continue to play in job creation, the growth of business enterprises in communities, and the growth of gross domestic product (GDP). Sadly, in addition to their national development efforts, only a small percentage of these family-owned businesses survive the second and third generations. This astonishing practice worries many scholars who claim that these failures are embedded in poor asset systems, incompetence of the management team, poor transformation plans, etc. CEOs and the survival of these family-owned businesses was limited. This multidisciplinary study examined the personality traits of CEOs in Machiavellianism in the southern region of Nigeria and the survival of family-owned businesses. This study is tied to the Sustainable Family Business Theory (SFBT). The study consisted of 628 people, with 289 participants from hotels in the southern region of Nigeria. A structural model used for data analysis, CEO Machiavellianism points out that personality traits are negatively related to the survival of family-owned businesses.
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Fralich, Russell, and Hong Fan. "CEO social capital and contingency pay: a test of two perspectives." Corporate Governance 15, no. 4 (2015): 476–90. http://dx.doi.org/10.1108/cg-05-2014-0056.
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Purpose – This paper aims to provide greater understanding of how the composition of pay reduces agency cost to the shareholders by examining how firms pay their chief executive officers (CEOs). More specifically, this study examines the relationship between CEOs’ social capital, measured as external directorships, and their contingency pay, the proportion of their compensation that depends on achieving long-term performance goals. Design/methodology/approach – The authors use a panel sample of Standard & Poor 500 CEOs to test two contrasting theoretical perspectives. From a board perspective, boards attempt to retain executives with more social capital working longer for the firms to utilize executives’ social capital and pay them more in the form of contingency pay. The CEO power perspective argues that CEOs wield social capital as a form of power to lower contingency pay in an attempt at preserving wealth. Findings – CEO social capital does not exacerbate agency pressures. Boards reward the long-term benefits of social capital accumulated by CEOs through higher proportions of contingency pay. Research limitations/implications – The authors considered CEOs of well-capitalized, publicly-traded US-based firms. So the results may not generalizable to other contexts. Practical implications – Boards do recognize and reward CEOs for their social capital, and use higher levels of contingency pay to lock in CEOs with social capital. Originality/value – This is the first study to explicitly examine the impact of CEO social capital on both non-equity and equity compensation.
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Miller, Danny, and Xiaowei Xu. "MBA CEOs, Short-Term Management and Performance." Journal of Business Ethics 154, no. 2 (2017): 285–300. http://dx.doi.org/10.1007/s10551-017-3450-5.
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Sayyadi, Mostafa. "Lee Iacocca: How a Superstar CEO Can Be a Valuable Asset for a Company." Muma Business Review 8 (2024): 165–71. https://doi.org/10.28945/5425.
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On November 2, 1978, the Detroit Free Press ran two big headlines. The first, "Chrysler in the Valley of Loss," and the second, "Lee Iacocca joins Chrysler." A savior was born. Haphazardly looking was the CEO John J. Riccardo's office. Iacocca immediately understood why Chrysler was on the brink of failure---no order. Besides the fact that Riccardo needed discipline, the CEO's assistant spent most of the time preoccupied with personal matters. Many CEOs rely on the organizational skills of the office administrator. Thus, change was inevitable. Lee Iacocca was the key factor in this change. Lee Iacocca was admired and trusted by the people as he saved the Chrysler Corporation from insurmountable challenges. Like many corporate leaders, Iacocca was an engineer by trade and a leader at heart. In 1994, one year after he retired from the chairmanship of Chrysler, it was revealed that he was the first choice in a poll of the five most admired leaders. Bill Gates was ranked second. As a veteran of the automotive industry, Iacocca is the leader that saved Chrysler from bankruptcy. Fired once in his career by Henry Ford, Iacocca made a remarkable comeback. Iacocca's leadership story at Chrysler Corporation can provide very important and critical lessons for CEOs across the globe. And this article uncovers these critical leadership lessons for CEOs.
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Tinaikar, Surjit, and Kun Yu. "Pay performance sensitivity and earnings restatements." Corporate Ownership and Control 11, no. 3 (2014): 273–93. http://dx.doi.org/10.22495/cocv11i3c2p5.
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We examine whether the board of directors adjusts the sensitivity of CEO compensation to earnings following an earnings restatement. Using a sample of 598 restating firms and 2,065 non-restating firms during the period of 1995-2011, we find that firms decrease the sensitivity of cash compensation to accounting earnings after restatements and that this decrease is more pronounced for firms that appoint new CEOs after restatements than those whose CEOs continue to remain in office after restatements. Furthermore, the results suggest that the decrease in the sensitivity of cash compensation to earnings for restating firms with new CEOs is more pronounced for firms with a higher level of institutional ownership. This highlights the monitoring role of institutional investors in the redesign of compensation contracts following restatements. Overall, our results are consistent with the argument that the board adjusts the sensitivity of cash compensation to earnings downwards following restatements to constrain earnings management and recover public confidence in the firm.
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Hur, Kang Sung, Dong Hyun Kim, and Joon Hei Cheung. "Managerial Overconfidence and Cost Behavior of R&D Expenditures." Sustainability 11, no. 18 (2019): 4878. http://dx.doi.org/10.3390/su11184878.
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This study examines the impact of a CEO’s confidence level on decisions regarding research and development (R&D) expenditures. R&D is an important part of a company’s strategy for achieving long-term sustainable growth. However, due to its discretionary nature, some CEOs choose to reduce R&D costs to enhance short-term performance. In other words, R&D cost behavior may vary depending on CEO characteristics. This study examines whether, in an effort to improve their firm’s future performance, CEOs who are highly overconfident tend not to actively decrease R&D expenditures even when sales decrease. We posit that CEO overconfidence affects the cost behavior of R&D spending that is not related to their personal privileges. A cost behavior model was utilized to verify the relationship between CEOs’ propensity for overconfidence and R&D expenditures. Our findings show that highly overconfident CEOs tend not to take actions to reduce R&D costs even if sales decrease because CEO overconfidence tends to be positively related to R&D. Since R&D represents both costs and long-term investments, policy support for capitalizing R&D costs can be considered as enhancing the sustainability of businesses.
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Palmer, Joshua C., R. Michael Holmes, and Pamela L. Perrewé. "The Cascading Effects of CEO Dark Triad Personality on Subordinate Behavior and Firm Performance: A Multilevel Theoretical Model." Group & Organization Management 45, no. 2 (2020): 143–80. http://dx.doi.org/10.1177/1059601120905728.
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Chief executive officer (CEO) personality has emerged as a key predictor of firm performance. A burgeoning literature rooted in psychology has shown that leaders with the dark triad personality traits (i.e., narcissism, Machiavellianism, and psychopathy) can have harmful effects on organizations. However, scholars have not fully illuminated the “black box” of processes that explain how and why CEO dark personality matters. Specifically, we know little about the microfoundations of CEOs’ influence: how and why do the effects of CEO dark personality cascade down to affect employees and outcomes throughout the different levels of the firm. Therefore, we explore how CEOs’ personalities shape their relationships with other top management team (TMT) members and how these relationships affect other employees in the organization. Specifically, drawing on upper echelons theory and social exchange theory, we provide a multilevel theoretical model examining how distinct CEO dark triad traits shape CEO–TMT exchange quality, TMT destructive leadership, TMT behavioral integration, subordinates’ counterproductive work behaviors, and ultimately firm performance. Implications for theory, future research, and practice also are discussed.
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Park, So-Hyun, and Changhoon Jung. "The Impact of Informatization Leadership of CEOs and Executives in SMEs on Business Performance: A Balanced Scorecard Perspective for Sustainable Management." Sustainability 17, no. 1 (2024): 32. https://doi.org/10.3390/su17010032.
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Informatization is an essential component of becoming a sustainable and competitive SMEs in a rapidly changing society. Previous studies suggest that the informatization leadership of CEOs and executives, especially in SMEs, can have a significant impact on business performance. To empirically analyze this possibility, this study analyzes the impact of CEOs’ and executives’ informatization leadership on business performance using data from 4000 SMEs in Korea in 2020. In particular, we also examine it from the perspective of BSC business performance, which includes non-financial indicators along with financial performance, which is a short-term indicator. In this study, exploratory factor analysis was conducted to extract variables based on secondary data. And multiple regression analysis was conducted to examine the relative importance and direction of the influence of independent variables on dependent variables. The results show that informatization leadership does not have a statistically significant impact on financial performance. In other words, informatization leadership does not affect short-term financial performance. However, there is a statistically significant positive impact on BSC business performance. This means that the higher the informatization leadership, the higher the BSC business performance, including non-financial performance. Therefore, it implies that the CEOs and executives of SMEs should have informatization leadership for long-term performance. This study reveals the importance of informatization leadership of CEOs and executives in SMEs and suggests that CEOs and executives should strive to improve their informatization leadership for sustainable management in the future. This study also provides policy implications for improving informatization leadership.
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Kim, Hong Soon, and SooCheong (Shawn) Jang. "Outside CEOs and restaurant performance: the moderating effect of franchising and recession." International Journal of Contemporary Hospitality Management 33, no. 4 (2021): 1319–43. http://dx.doi.org/10.1108/ijchm-07-2020-0717.
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Purpose This paper aims to explore the effect of hiring outside chief executive officers (CEOs) on restaurant performance. As outside CEOs have a mandate to bring changes but lack internal knowledge, this study expected that outside CEOs impose a significant influence on restaurant performance. It was further expected that the relationship is substantially moderated by franchising and recession. Design/methodology/approach The CEO data was manually collected from firms’ annual filings and the EXECOMP database. The COMPUSTAT database was used for company financial data. A two-way panel regression was used to examine the proposed relationships. Findings The results revealed that outside CEOs have a positive effect on growth but a negative effect on restaurant profitability. It was further turned out that franchising significantly moderates the outside CEO-performance relationship. However, the moderating effect of recession turned out to be insignificant. Practical implications The results suggested that outside CEOs play a critical role in determining restaurant performance. The results further imply that franchising helps to maximize the positive effect of outside CEOs while mitigating the adverse effects of outside CEOs. Originality/value This study is one of the first to examine the effect of outside CEOs in the hospitality context. Moreover, this study extended the literature by revealing the relationship in the restaurant industry and highlighting the importance of long-term organizational context.
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Silberzahn, Chittima, and Jean-Luc Arregle. "The career-horizon problem in capital investments for lone-founder and long-tenure acquirer CEOs in their final career stage." Strategic Organization 17, no. 3 (2018): 334–62. http://dx.doi.org/10.1177/1476127018789594.
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In this study, we apply organizational identification theory to enrich our knowledge of the career-horizon problem when CEOs are approaching retirement. The extant literature suggests that the closer a CEO is to retirement, the more likely she or he is to avoid long-term firm investments. Focusing on capital investments, we argue that the distinctive organizational identification with the firm of lone-founder CEOs and long-tenure acquirer CEOs can moderate the likelihood that the closer a CEO is to retirement, the more likely she or he is to avoid capital investments. We test and validate our hypotheses on a sample of CEOs in S&P 1500 non-financial firms between 1999 and 2010. This article contributes to the literature on CEO career horizons by providing a new and more fine-grained perspective on the important question of how different types of CEOs consider capital investments and the future of their firms as they approach retirement.
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Baek, Kil-Joo, and Young-Jun Yeo. "The Impact of a De Facto CEO on Environmental, Social, and Governance Activities and Firm Value: Evidence from Korea." Sustainability 15, no. 21 (2023): 15308. http://dx.doi.org/10.3390/su152115308.
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This study analyzes the influence of CEO types on corporate governance, focusing on de facto (substantial) CEOs. We examine how substantial CEOs impact environmental, social, and governance (ESG) activities (Hypothesis 1) and corporate value (Hypothesis 2). Data were collected from KIS-VALUE and DART (Electronic Disclosure System) from the Financial Supervisory Service, defining substantial CEOs as the highest remuneration recipients who exceed the pay of the company’s representative director. The results support Hypothesis 1, showing that companies with substantial CEOs are more likely to engage in ESG activities, potentially to improve public image while concealing self-serving behaviors. Hypothesis 2 is validated, indicating lower corporate value in companies with substantial CEOs, owing to the prioritization of personal interests over long-term profit maximization. Despite the limitations of exploring governance relationships beyond remuneration data, this study offers key contributions. It expands the research on corporate governance and ESG activities by identifying substantial CEOs through objective remuneration data. Additionally, it highlights the importance of an independent board for transparent governance and positive corporate value. Lastly, the empirical evidence shows the negative impact of misdirected ESG activities on corporate value. Using remuneration as an indicator, this study illuminates substantial CEOs’ influences on corporate value and ESG activities, providing insights for future research in this area.
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Park, Soo Yeon, and Kwan Hee Yoo. "CEO Career Concerns And Voluntary Disclosure." Journal of Applied Business Research (JABR) 32, no. 6 (2016): 1603. http://dx.doi.org/10.19030/jabr.v32i6.9811.
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This paper investigates the relation between Chief Executive Officers (CEO) career concerns and voluntary disclosures using listed firm (KOSPI) data in Korea. Prior research suggests that explicit incentives in the form of CEO stock-based compensation or CEO’s equity ownership mitigate the agency problems of reluctance to make voluntary disclosure. In addition, implicit incentives arising from CEO career concerns are as important as explicit incentives for mitigating agency problems.The labor market assesses CEOs ability and CEO reputation in the market is a valuable asset that is associated with many long-term benefits, such as better future compensation, reappointment in the position, and greater managerial autonomy. CEOs are concerned about such an assessment and these concerns are referred to as career concerns. However, the market has incomplete information about CEOs’ ability especially when the CEOs have short tenures as a CEO position. Hence, CEOs with short tenures have more strong incentives to signal their ability to the labor market so that they can build proper reputation.Implicit incentives arising from CEO career concerns are measured by CEO tenure. I assume that short-tenured CEOs are more career-concerned than long-tenured CEOs. I find that CEOs with short tenures tend to more likely disclose management forecasts. I interpret this result that more career-concerned CEOs have strong incentives to signal their ability to the labor market in order to build their reputations which affect their future payoffs such as compensations and reappointment. In addition, management forecasts, means of voluntary disclosure, are used as effective mechanism. I also find that CEOs with short tenures tend to disclose more accurate management forecasts. This result implies that CEOs with more career concerns have more pressure to provide accurate forecasts because of their reliability in the labor market. Based on these empirical results, I infer that CEOs’ implicit incentives affect their voluntary disclosure decision.This study will contribute to academics and disclosure-related practitioners by documenting about CEOs’ career concerns and their voluntary disclosure decisions.
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Eva, Nathan, Alexander Newman, Qing Miao, Brian Cooper, and Kendall Herbert. "Chief executive officer participative leadership and the performance of new venture teams." International Small Business Journal: Researching Entrepreneurship 37, no. 1 (2018): 69–88. http://dx.doi.org/10.1177/0266242618808558.
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In this article, we examine the mediating role played by affective and cognitive trust in chief executive officer (CEO) and intra-group trust, on the relationship between CEO participative leadership and the performance of the top management team (TMT) and its members within entrepreneurial new ventures. Drawing on four waves of multilevel, multi-source data, our study extends social exchange theory by teasing out the trust-based social exchange mechanisms linking CEO participative leadership to performance outcomes. Specifically, the data analysis revealed that intra-group trust mediated the relationship between CEO participative leadership and TMT performance, while affective trust mediated the relationship between CEO participative leadership and performance of TMT members. However, cognitive trust did not mediate this relationship. This suggests that it is important for CEOs of new ventures to use participative leadership to create strong levels of affective trust with TMT members and intra-group trust within the TMT.
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Boatright, John R. "From Hired Hands to Co-Owners: Compensation, Team Production, and the Role of the CEO." Business Ethics Quarterly 19, no. 4 (2009): 471–96. http://dx.doi.org/10.5840/beq200919429.
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ABSTRACT:In the 1990s, the role of the chief executive officer (CEO) of major United States corporations underwent a profound transformation in which CEOs went from being bureaucrats or technocrats to shareholder partisans who acted more like proprietors or entrepreneurs. This transformation occurred in response to changes in the competitive environment of U.S. corporations and also to the agency theory argument that high levels of compensation by means of stock options helped to overcome the agency problem inherent in the separation of ownership and control. Some critics charge that this new CEO role is objectionable for a variety of reasons, which may also be applicable to the current financial crisis in which CEO misconduct may have played a part. These objections are based largely on a team production model of corporate governance, which is held by these critics to be superior to the standard agent-principal model. This article examines the objections offered by critics of the changed role of the CEO and argues that their negative assessment of this development and their use of the team production model to support their conclusions are not warranted. CEOs have changed from hired hands to co-owners, and this change may have contributed in some measure to the current financial crisis. However, in determining the morally preferable role of the CEO, care must be taken not to discard what is sound in the changed role.
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Kim, Yujin. "Can MZ CEOs Become the Winning Pitchers of Innovative Companies? : Examining the Influence of MZ CEOs in Prospector Strategy Companies." Korean Accounting Information Association 42, no. 4 (2024): 55–80. https://doi.org/10.29189/kaiaair.42.4.3.
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[Purpose] This study aims to explore whether Millennial and Generation Z (MZ) CEOs can be pivotal in driving the growth of innovative companies, especially amid the trending issue of their appointments as top executives in major firms. It investigates whether there is a difference in firm value between companies managed by MZ CEOs versus those that are not, with a particular focus on comparing defensive companies that prioritize cost minimization for short-term results against innovative companies that emphasize long-term performance through innovation. [Methodology] The study employs a dataset of Korean listed companies on the KOSPI and KOSDAQ from 2013 to 2022, following the adoption of the IFRS. I conduct panel data analysis to examine the impact of MZ leaders on corporate value and the moderating effects of business strategy. [Findings] The findings reveal no significant direct correlation between MZ CEOs and firm value. However, a moderating effect of business strategy is observed in the relationship, indicating that the positive impact of MZ CEOs on financial performance is significant only in innovative companies. Additionally, when assessing the aspects of research and development, efficiency, growth potential, marketing, organizational stability, and capital intensity, four areas-research and development, efficiency, growth potential, and capital intensity-show a clear positive impact of MZ CEOs on firm value. [Implications] This research extends the scope of accounting studies related to the determinants of corporate financial performance, characteristics of executives, and strategy by empirically examining the generational issues of executives, firm value, and business strategy. Practically, it validates the management capabilities of MZ CEOs at the forefront of generational changes in executive teams, suggesting suitable executive characteristics for innovative companies aimed at sustainable future growth.
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Wang, Zeping, Xingqiu Hu, and Feifei Yu. "How does CEO narcissism affect enterprise ambidextrous technological innovation? The mediating role of corporate social responsibility." PLOS ONE 18, no. 1 (2023): e0280758. http://dx.doi.org/10.1371/journal.pone.0280758.
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In the context of a dynamic environment and increasing competition, innovation is the key for companies to gain long-term growth. And narcissism, as an important psychological factor influencing CEOs to make corporate decisions, has a significant impact on corporate innovation strategies. This study explores localized dimensions and ways of measuring narcissism among Chinese CEOs. Based on the upper echelons theory, using data from R&D-intensive firms listed in Shanghai and Shenzhen A-shares from 2015–2020, this study empirically examines the effect of CEO narcissism on exploratory and exploitative innovation and the mediating role of corporate social responsibility. The results show that: CEO narcissism has a positive effect on corporate ambidextrous technological innovation and a more significant effect on exploratory innovation; the mediating role of corporate social responsibility is all verified. These findings provide a reference for listed companies to select and hire CEOs scientifically and rationally, and have important implications for companies to develop long-term innovation strategies.
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Haislip, Jacob, Jee-Hae Lim, and Robert Pinsker. "The Impact of Executives’ IT Expertise on Reported Data Security Breaches." Information Systems Research 32, no. 2 (2021): 318–34. http://dx.doi.org/10.1287/isre.2020.0986.
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Data security breaches (DSBs) are increasing investor and regulator pressure on firms to improve their IT governance (ITG) in an effort to mitigate the related risk. We argue that DSB risk cannot be mitigated by one executive alone, but, rather, is a shared leadership responsibility of the top management team (TMT) (i.e., Chief Executive Officer [CEO], Chief Financial Officer [CFO], and Chief Information Officer [CIO]). Our results suggest that IT-savvy CEOs see technologies related to mitigating DSBs as a top-three most important type of digital methodology for their firm. Similarly, the results related to CFOs with IT expertise single out the critical investment in controls designed to prevent DSBs. Our strong findings for CIOs on the TMT add to the related guidance from COBIT 5 for information security and consistently suggest that they are the key executive for securing IT systems. Finally, our granular explanation of each executive’s DSB-related responsibility could potentially provide firms the start of a governance-led roadmap for compliance to the Securities and Exchange Commission’s and Justice Department’s cyber regulations.
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Deng, Dejun, Li Xiaoqing, Nataliia Pochynok, and Gao Manyun. "Outside the Family: The Impact of Non-Family CEOs on Accounting Irregularities in Family Businesses." Herald of Economics, no. 1 (April 7, 2025): 138–47. https://doi.org/10.35774/visnyk2025.01.138.
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Introduction. Family businesses are increasingly appointing non-family CEOs to navigate corporate governance complexities and ensure legacy continuity. New dynamics are being introduced that affect the ethical landscape of the firm and the propensity for corporate misconduct. Despite growing literature on non-family CEOs in family firm’s, their influence on corporate misconduct, particularly in relation to financial health and market competition, remains underexplored. Purpose. The study should reveal the effect of non-family CEOs on accounting irregularities in family businesses, focusing on the moderating effects of financial health and competitive market environment. Methods. The research employs a combination of descriptive statistics, correlation analysis, t-tests, and multivariate regression analysis to examine the relationship between non-family CEOs and corporate misconduct. Robustness tests, including alternative dependent variable specifications, propensity score matching (PSM), and redefining the family firm, ensure the reliability of the findings. Results. The study finds that non-family CEOs are more likely to engage in corporate misconduct, particularly in financially healthy firms and less competitive markets. On average, 17.1 % of listed family firms in China exhibited misconduct behavior between 2008 and 2022, with a frequency of 0.234. The correlation coefficients between the likelihood of misconduct and the key independent variable and between the frequency of misconduct and PCEO are significantly positive at the 1% level. T-tests show a statistically significant difference between family firms with family CEOs and those with non-family CEOs for both the likelihood of violation and the frequency of violations. Multivariate regression analysis confirms that non-family CEOs are positively and significantly associated with both the likelihood and frequency of corporate violations at the 1 % significance level. Prospects. Future research could explore the role of non-family CEOs in different economic and cultural contexts, investigate the long-term effects of non-family CEO leadership on family firm performance and sustainability.