Abstract
This article examines the relationship between CEO characteristics and firm performance with a sample formed by the best performing CEOs in the world according to Harvard Business Review. The empirical analysis is based on descriptive statistics techniques and studies the universe of CEOs included in the 2016 ranking “The Best-Performing CEOs in the World” released by Harvard Business Review. Moreover, it addresses performance at various levels: financial performance, environmental, social and governance performance (ESG) and overall performance. The findings of the study show: 1) a strongly negative association between financial and ESG performance; 2) outsider CEOs outperform insider CEOs in overall performance; 3) CEOs with engineering degrees show significantly higher ESG performance; 4) CEOs with longer tenures in the firm present stronger financial performance though weaker ESG performance; and 5) the CEO’s country of origin emerges as an important driver to explain the different types of performance. Results in this field contradict the conventional wisdom of Anglo-Saxon CEOs as the best performers CEOs.
Highlights
What drives CEO performance is a hot research topic in the literature and has been investigated from various perspectives
The region of origin of the CEO is an important factor to explain ESG performance, but not to explain different levels of financial performance; second, CEOs from the France civil-law region tend to perform better than the rest, and base this superior overall performance on stronger ESG performance; and third, CEOs from the Anglo-Saxon common-law region tend to perform worse than the rest, due to a poorer ESG performance
The results of this research allow to draw several interesting conclusions. It is observed a clear trade-off between financial and ESG performance, as higher levels of financial performance are strongly associated with weaker ESG performance
Summary
What drives CEO performance is a hot research topic in the literature and has been investigated from various perspectives. Researchers have examined the role of the form of appointment of the CEO (internal or external) (Karaevli & Zajac, 2013; Hoitash & Mkrtchyan, 2018), academic background (Mintzberg, 2004; Gottesman & Morey, 2010; Miller & Xu, 2019), age (Hambrick & Mason, 1984; Barker & Mueller, 2002; Belenzon et al, 2019), tenure in the firm According to information on individual CEOs provided by the HBR ranking, the empirical analysis is conducted through the six research questions below: 1. Is there any significant relationship between financial and ESG performance?
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