The Influence of the Ownership Structure on the Performance of Innovative Companies in the US

Karnoukhova, Elena; Stepanova, Anastasia; Kokoreva, Maria

doi:10.2139/ssrn.3287670

Cited by 1 publication

(2 citation statements)

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“…Following previous analysis of the ownership structure in our last paper (Karnoukhova, Stepanova, Kokoreva, 2018 [10]) we turn our view to the CEO's human capital research in innovative industry. For this purpose, we hand collected information about CEO: degree, the sphere of education, tenure, gender and was he/she founder.…”

Section: Resultsmentioning

confidence: 99%

“…However, in the academic literature the simultaneous influence of type of owner and CEO characteristics on the firm performance has been neglected. In our previous paper Karnoukhova, Stepanova, Kokoreva (2019) [10] we found that different types of investors differently affect firm performance in innovative industries. So, in this study we make a next step into the understanding of how and by whom the innovations are stimulated.…”

Section: Introductionmentioning

confidence: 84%

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Does Smart & Powerful CEO Contribute to the Performance of Technology Companies?

Karnoukhova¹,

Stepanova²

2019

КФ

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In recent decades, innovative companies became one of the major drivers of economy worldwide. According to surveys, nearly 70% of the world’s most innovative companies in 2019 are U.S. firms. However, academic studies mostly focused on the influence of the top management team and the board of director’s on the firm performance, on the relationship between innovations and CEO`s preferences. However, we suppose CEO can exert a significant influence on performance of innovative companies. We strive to show which CEO characteristics could lead to higher firm value. Does highly educated CEO contribute more to innovations in hi-tech sphere? Does CEO power matter? Are founders better CEOs than newcomers or professionals for technological companies with their longer horizons and higher risks? This research uses Generalized Least Square model on a sample of 12565 firm-year observations during 2004-2015 period. For this research we used data for three innovative industries: Pharmaceuticals, Biotechnology & Life Sciences, Software & Services and Technology Hardware & Equipment industries. We have hand-collected data from the CVs in CIQ database. Overall, the empirical results reveal that educational background, tenure, duality play crucial roles in explaining firm value. This study contributes to the existing literature in two aspects. First, our findings indicate that CEO characteristics play crucial roles in explaining technology firm value and performance. We demonstrated that founding CEO contributes to technology firm performance as well as the CEO with better education. Second, CEOs should be smart and powerful in order to sustain firm performance. We found that CEOs characteristics could mitigate the conflicts between different types of investors and their influence on firm performance. More specifically, CEOfounder was found to add greatly to the firm performance of Software and Pharmaceutical companies. Furthermore, the influence of CEO seems to mitigate the conflict of interest with independent active institutional investors in Hardware industry. We provided examples to prove the validity of our tests.

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Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 84%