Board-CEO friendship ties and firm value: Evidence from US firms

Fan, Yaoyao; Boateng, Agyenim; King, Timothy; MacRae, Claire

doi:10.1016/j.irfa.2019.101373

Cited by 24 publications

(19 citation statements)

References 87 publications

(182 reference statements)

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“…We identified 61 papers that used interaction models to examine the moderating effect, with CEO duality as a moderator or the main variable. Fan et al (2019) indicate that CEO duality negatively moderates the relationship between board‐CEO friendship ties and firm value as board monitoring is weak. Table 4 panel A summarizes some studies that identify moderators of the CEO duality–performance relationship: negative role of ownership concentration (Singh et al, 2017), positive role of board independence (Duru et al, 2016), as well as debt level (Chen & Nowland, 2010), and cash flow (Chen & Nowland, 2010; Chi & Lee, 2010).…”

Section: Review Resultsmentioning

confidence: 99%

CEO duality and firm performance: A systematic review and research agenda

Maemura

2022

European Management Review

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This paper systematically reviews 314 empirical studies that examine the relationship between board leadership structure and firm performance. The results show that the mixed research findings are due to different firm performance measurements, research designs, sampling practices and approaches of dealing with endogeneity issues. Studies utilizing multiple-country data, multinational companies, small firms or regions covering Africa, the Middle East, Eastern Europe and South America are under-represented. It critiques the methodological weaknesses of some empirical studies and proposes that future researchers should use multiple firm performance measurements, a longitudinal research design and an integrative framework to better control the direct and moderating factors. Future researchers may advance the robustness of research by using multiple theoretical lenses to consider how various governance factors moderate the relationship between board leadership structure and firm performance, particularly the different ownership structures, managerial discretion contexts and national institutional factors.

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Section: Review Resultsmentioning

confidence: 99%

CEO duality and firm performance: A systematic review and research agenda

Maemura

2022

European Management Review

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“…From resource dependency perspective, we argue that CEOs with larger network will have access to information and resources and hence may have a positive effect on firm value. On the other hand, Fan et al (2019) find that board-CEO friendship ties have a negative effect on firm value but that professional ties positively impact on firm value. Likewise, Brown et al (2012) find that the size of the CEO's network increases the CEO's compensation but reduces the sensitivity of the CEO's pay to performance.…”

Section: Chief Executive Officer Network Sizementioning

confidence: 79%

Firm performance and CEO turnover: the moderating role of CEO attributes

Chijoke‐Mgbame

Boateng

Mgbame

et al. 2023

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Purpose This study aims to examine the effects of firm performance on chief executive officer (CEO) turnover and the moderating role of CEO attributes on the firm performance–CEO turnover relationship. Design/methodology/approach Probit regressions were used to examine the relationship between various CEO attributes and CEO turnover and the moderation effect of firm performance on the CEO attributes–CEO turnover relationship. The sample comprises firms from the FTSE 350 Index covering the period 1999–2018. Findings The results indicate that firm performance negatively and significantly impacts CEO turnover. Further analysis reveals that selected CEO attributes, namely, CEO internal experience, CEO network size and CEO age, moderate the relationship between firm performance and CEO turnover. Specifically, CEO internal experience and performance combine to reduce the likelihood of CEO turnover. However, CEO network size and age when combined with firm performance increase the likelihood of CEO turnover. Practical implications The results imply that boards should pay more attention to CEO attributes in their decisions to hire and fire executive managers as these factors may affect a wide variety of firm outcomes. Originality/value This paper makes key contributions to the CEO turnover and corporate governance literature by providing evidence of key factors other than performance that can affect the CEO dismissal decision. Specifically, this study shows that CEO attributes such as CEO internal experience, CEO networks and CEO age far outweigh the importance of performance as a factor influencing CEO turnover decisions.

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“…The CEO is the most powerful governing person and essential human capital in an organisation, making all significant financial decisions (Fan et al, 2019). Upper echelon theory states that decisions at the upper echelon are highly bureaucratic and uncertain.…”

Section: The Literature and Hypothesis Developmentmentioning

confidence: 99%

A CEO's expertise power and bank diversification

Ali

Gan

Nadeem

2023

Accounting & Finance

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We examine the effect of a chief executive officer (CEO)'s expertise power on bank diversification. Using US bank data from 1990 to 2020, we find that a CEO's expertise power is positively associated with bank diversification. Market competition and board composition (size and independence) positively affect this relationship. We also find that CEO delta and vega are the underlying mechanisms through which expertise power leads to greater diversification. We address endogeneity concerns using the two‐stage least squares, Heckman estimation and the difference‐in‐differences approaches and check result robustness in several ways. We provide a new explanation for bank diversification that is useful for policymakers in developing a bank strategy concerning CEO behaviour in diversification.

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Board-CEO friendship ties and firm value: Evidence from US firms

Abstract: The version in the Kent Academic Repository may differ from the final published version. Users are advised to check http://kar.kent.ac.uk for the status of the paper. Users should always cite the published version of record.

Cited by 24 publications

References 87 publications

CEO duality and firm performance: A systematic review and research agenda

CEO duality and firm performance: A systematic review and research agenda

Firm performance and CEO turnover: the moderating role of CEO attributes

A CEO's expertise power and bank diversification

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