CEO attributes, investment decisions, and firm performance: New insights from upper echelons theory

Abstract

The study examines the role of a CEO in enhancing a firm's performance through the mediating effect of investment decisions in the emerging economy of Pakistan. Distinctly, fixed‐effects panel regression method is employed to examine the said nexus of nonfinancial firms listed at the Pakistan Stock Exchange. It is empirically unearthed that CEO attributes, namely, age, tenure, ownership, financial education, and career experience, are positively related to firm performance in general and capital investment decisions in particular. Second, capital investment decisions partially and significantly mediate the nexus between CEO attributes and firm performance with few exceptions that confirm the theoretical implications of upper echelons theory in an emerging economy context.

The influence of CEO profile on corporate social responsibility companies. A qualitative comparative analysis

“…Especially in the early stages of their tenure, CEOs show a strong interest in their work, by seeking information and showing a desire to learn, despite their limited knowledge of the company (Citrin et al, 2019; Hambrick & Hambrick & Fukutomi, 1991). As tenure increases, CEOs become increasingly confident (Citrin et al, 2019) and they perform better (Ali et al, 2021). With respect to the impact of CEO tenure on CSR, the results remain inconclusive.…”

“…Our study contributes to the literature of corporate governance and CSR in several ways. Firstly, drawing on insights from upper echelon theory (Ali et al, 2021; Neely et al, 2020; Zhu et al, 2020), we furthered the concept of profile to explain a CEO's behaviour and decision‐making (Wang et al, 2016). The joint study of the individual attributes of the CEO that influence the CSR of their companies expands the research previously carried out in this regard (Saridakis et al, 2020), meaning that attributes which do not achieve significant results if they are studied individually become important if they are considered together.…”

Corporate governance, working capital management, and firm performance: Some new insights from agency theory

“…Working capital management (WCM) is considered to be one of the of the three core areas of corporate finance (Danso et al, 2021). The other the two-capital structure and capital budgeting-are associated with the management and financing of investments over a long-term period (Ali et al, 2021). WCM is a significant part in corporate finance, which deals with short-term management of financing and investment decisions made by firms.…”

CEO's age and investment‐cash flow sensitivity

“…Recent literature highlights the significance of CEO's characteristics on investment decisions (Ali et al, 2021; Ben Mohamed et al, 2014; Farag & Mallin, 2018; Gupta et al, 2021; Hu & Liu, 2015; Malmendier & Tate, 2005a, 2005b; Setiawan & Gestanti, 2018; Serfling, 2014). Considering the studies mentioned above, this study found very little evidence on the relationship between the CEO's age and ICFS.…”