Abstract

Research shows that CEO power can play an instrumental role in firm performance. We examine the link between CEO power and sales order backlog, a leading firm performance indicator. We find a significant positive relation between sales order backlog and CEO power, suggesting that firms with a higher level of sales order backlog have more-powerful CEOs. This is consistent with prior research that links CEO power to improved firm performance. We also find support for upper echelons theory by showing that this relationship is largely driven by firms with younger CEOs, firms with male CEOs, or firms with longer-tenured CEOs. Our study extends research on CEO power providing evidence of how CEO power relates to enhanced firm value. The study also extends accounting and capital markets research by informing the market of the link between the leading firm performance indicator of sales order backlog and CEO power.

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