When Crisis Knocks, Call a Powerful CEO (or Not): Investigating the Contingent Link Between CEO Power and Firm Performance During Industry Turmoil

Gupta, Vishal K.; Han, Seonghee; Nanda, Vikram; Silveri, Sabatino

doi:10.1177/1059601116671603

Cited by 37 publications

(24 citation statements)

References 80 publications

(108 reference statements)

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…For the hypothesis three which test the interaction the result indicate that the relationship is insignificant hence conclusion could not be drawn. The result supported the agency theory that powerful CEO affect firm negatively (Gupta et al, 2018;Veprauskaitė & Adams, 2013).…”

Section: Journal Of Finance and Economics Researchsupporting

confidence: 80%

“…One of the key assumptions of the agency theory is that the manager (CEOs in this regard) is inclined toward achieving their own interest irrespective of whether the interests tally with that of their principals (Fama, 1980). The extension of the theory portrays CEO power as an inimical tool used at the detriment of the shareholders (Adams, Almeida, & Ferreira, 2005;Li, Meng, Wang, & Zhou, 2008;Veprauskaitė & Adams, 2013;Gupta, Han, Nanda, & Silveri, 2018). There is emphasis on the need to use many of the available attribute of the CEO power.…”

Section: Literature Review Theoretical Frameworkmentioning

confidence: 99%

See 1 more Smart Citation

CEO Experience and Firm Performance: Evidence from Nigerian Financial Sector

Saidu¹,

Baba²

2020

j.financ.econ.res

View full text Add to dashboard Cite

Experiences in many aspects are important in determining factor for the selection and promotion of employees, especially to managerial positions. However, empirical evidence on the contribution of CEO experiences to firm outcomes is limited. This paper attempts to address the literature gap by examining the impact of CEO experience on the firm financial performance of the listed firms in the financial sector. The study uses balanced panel data for six years from 2011 to 2016 in running regression analysis. Independent variables that include the CEO tenure and CEO multiple board memberships are considered in measuring the CEO experience. The result from the analysis indicates that CEO tenure has a negative effect on firm performance measured by ROA. The finding supports the view of the agency theory that CEO has an opportunistic tendency when they stay longer than the industry average. The implication is that the CEO that stays long in office need to be closely monitored so that they could use their know-how in pursuing the goals of the organisation rather than their selfish goals.

show abstract

Section: Journal Of Finance and Economics Researchsupporting

confidence: 80%

Section: Literature Review Theoretical Frameworkmentioning

confidence: 99%

CEO Experience and Firm Performance: Evidence from Nigerian Financial Sector

Saidu¹,

Baba²

2020

j.financ.econ.res

View full text Add to dashboard Cite

show abstract

“…Kim and Lu () found also that greater abnormal CEO power is associated with weaker firm performance and that this effect is exacerbated when monitoring by the board is weak. Gupta and colleagues' study on CEO power and firm performance in turbulent times highlighted that “CEOs ultimately undermine firm performance during turbulent times” (: 991). Finally, Park, Kim, Chang, Lee, and Sung () found that CEO power exacerbated the negative effect of CEO hubris on firm performance, indicating a mediating negative effect of CEO power in the relationship between CEO hubris and firm performance.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Figureheads or potentates? CEO power and board oversight in the context of Sarbanes Oxley

Haynes

Zattoni

Boyd

et al. 2019

Corporate Governance

View full text Add to dashboard Cite

Research question/issue:We depart from studies that separately explore chief executive officers' (CEOs') and boards' effects on firm performance. Instead, we examine the direct relationship between CEO power and firm performance, and how board monitoring, and most importantly, a change in the regulatory environment alter the relationship. As such, our study jointly examines the role of both internal and external corporate governance mechanisms on the relationship between CEO power and firm performance. Research findings/insights:Our findings indicate that the negative main effect of a powerful CEO on firm performance is reduced by board monitoring and that the Sarbanes Oxley (SOX) legislation amplifies board monitoring and reduces the negative effects of CEO power.Theoretical/academic implications: Our study shows that agency relationships are grounded in social and institutional contexts. More precisely, our results suggest that CEO power is a function of CEO's relationship with the board, as CEO power and board monitoring interactions affect firm performance. Furthermore, they indicate that the CEO-board relationship is constructed within the legal institutional context, as the shock of SOX alters the effects that different combinations of CEO power and board monitoring have on firm performance. Practitioner/policy implications:Our results highlight to investors and directors that corporate boards should be designed in relation to the power of CEOs.In addition, they provide valuable guidance for policy-makers, suggesting that tight regulations may represent effective deterrents for some CEOs' misbehaviors and favor the alignment of interests with those of company owners. https://capture.udel.edu/media/Katalin+Takacs+Haynes+-+Video+Abstract/1_ ihl7pmhf

show abstract

“…Many of the recent studies ascribed agency situation to CEOs, and most of the studies used variables that have to do with managerial discretion (Gupta et al 2016;Veprauskaite and Adams 2013). Findings from most of the studies reported the negative impact of CEO power.…”

Section: Introductionmentioning

confidence: 99%

CEO characteristics and firm performance: focus on origin, education and ownership

Saidu

2019

J Glob Entrepr Res

View full text Add to dashboard Cite

This study examines the impact of the chief executive officer's (CEO) ownership, education and origin on firm performance. The study uses balanced panel data for 6 years from 2011 to 2016 to run ordinary least square regression. Three variables that include the CEO origin, education and ownership are investigated in relation to firm performance. These characteristics are some of the basic CEO characteristics that are rarely considered by prior studies. The study uses a sample from firms in the financial sector listed on the Nigerian Stock Exchange from 2011 to 2016. The findings indicate that CEO education improves profitability. Similarly, stock performance gets improved when the CEO has prior experience of the firm before being appointed as the chief executive officer. The findings will be useful to shareholders in making an informed decision in selecting the right CEO to manage the firm. Further studies need to consider not only the CEO ownership, but also whether the interest in ownership makes them more powerful.

show abstract

When Crisis Knocks, Call a Powerful CEO (or Not): Investigating the Contingent Link Between CEO Power and Firm Performance During Industry Turmoil

Cited by 37 publications

References 80 publications

CEO Experience and Firm Performance: Evidence from Nigerian Financial Sector

CEO Experience and Firm Performance: Evidence from Nigerian Financial Sector

Figureheads or potentates? CEO power and board oversight in the context of Sarbanes Oxley

CEO characteristics and firm performance: focus on origin, education and ownership

Contact Info

Product

Resources

About