Abstract
I examine the potential economic value of CEO reputation: performance improvement at the firm level and job retention benefits to the CEO. Two perspectives on CEO reputation offer different predictions regarding the benefits of CEO reputation. The ability perspective in the agency literature advocates the economic benefits of CEO reputation. The symbolic image perspective from recent CEO reputation studies, however, argues that CEO reputation does not necessarily improve firm performance or CEO job retention. I investigate which perspective is more consistent with empirical evidence. The results of firm performance tests show that CEOs with well-established reputations are able to sustain good firm performance but do not turn around poor performance in the near term. These results imply that stakeholders might have to consider replacing the CEO - no matter how highly regarded - with a turnaround specialist when a firm suffers financially. Another finding from job security tests shows that CEOs with high reputation are more likely to be dismissed than CEOs with low reputation when they perform poorly. These results suggest that the reputations of CEOs through promoting their own images in the media do not necessarily secure their job titles.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
