Abstract
CEO origin and CEO compensation and their impact on firm financial performance have gained equally significant traction amongst strategy scholars and management practitioners. Research is unequivocal about externally headhunted CEOs being compensated higher than internally promoted CEOs; however, results are mixed on whether externally headhunted CEOs generate higher financial performance than internally promoted executives do. In this paper, we find that while external CEOs total compensation is higher than their internally promoted counterparts, their basic salary is not. We also find that the CEO origin moderates the relationship between total compensation and firm’s ROA in that internally promoted CEOs strengthen this positive relationship while externally headhunted CEOs weaken this relationship. Moreover, the firm size (small, medium, large) moderates the previous moderation. Firm size (small, medium, large) moderates the previous moderation relationship. The general moderated relationship is negative and significant for smaller and medium size, while it is positive but statistically insignificant for larger organizations. The effect of this moderated moderation relationship is stronger for internally promoted CEOs, while it is statistically insignificant for externally headhunted CEOs.
Sign-in/Register to access full text options 
Free) 
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 call
