Do CEOs personal characteristics matter on transport firm value? A stochastic frontier model

Abstract

In this paper we initiate a new debate concerning the potential effect of CEO personal characteristics on their firms' value. Using a stochastic frontier approach, we essay to derivate the optimal firm value Q* and compute the observed Q value, we then explain the shortfall (Q*-Q) which represents the inefficiency term. Departing from 53 firms from 17 countries publicly traded during 2000-2011, we empirically demonstrate that managerial traits can largely explain the distortion on firm value. The paper also provides the optimal CEOs characteristics that can avoid such distortions.