CEO Behavior Research Articles

Corporate carbon emission governance: The mediating role of financial leverage

This study examines the impact of board composition and CEO behavior on corporate carbon management across 2012–2021. Based on agency theory and resource dependence theory, this study establishes panel quantile regression and mediation effect models to analyze the impact of corporate governance composition and financial leverage on corporate carbon emissions. The findings reveal that diverse boards reduce carbon emissions, highlighting the value of inclusive decision-making. Additionally, the relationship between board size and emissions follows a U-shaped curve, suggesting an optimal size for efficient decision-making; overconfident CEOs tend to increase emissions due to their optimistic risk assessments; and financial leverage further moderates the impact of board size on emissions. This study demonstrates the importance of environmentally responsible leadership and offers insights into how board composition and CEO attributes shape corporate environmental strategies.

Do CEOs' Industry Tournament Incentives Affect Stock Liquidity?

ABSTRACTResearch Question/IssueWe examine the relationship between CEOs' industry tournament incentives (CITI) and stock liquidity in the United States. We also examine if the effect of CITI on stock liquidity varies depending on the information‐asymmetry and corporate governance mechanisms.Research Findings/InsightsWe find that firms with stronger CITI are associated with greater stock liquidity. Exploiting the enforceability of executive noncompetition agreements across the states in the United States as a quasi‐natural experiment, we find that firms headquartered in states that introduce these agreements on average experience lower stock liquidity, suggesting a causal relation. We also find that the effect of CITI on stock liquidity is stronger among firms with severe information‐asymmetry problems, but weaker among firms with strong governance mechanisms.Theoretical/Academic ImplicationsWe extend research that examines the impacts of CEO industry tournament incentives on corporate outcomes and strategies. Our paper shows that CEO industry tournament incentives matter for stock liquidity. Our paper contributes to a large literature on the roles of CEO styles and behaviors in shaping corporate policies.Practitioner/Policy ImplicationsOur findings have several practical implications for investors, policymakers, and financial analysts. For example, our findings can help investors better understand how CEOs' compensation‐based incentives impact stock liquidity. Similarly, policymakers can use our findings to design policies that encourage CEOs to act in the best interest of their shareholders and promote market efficiency.

Setting the tone to get their way: An attention‐based approach to how narcissistic CEOs influence the board of directors to take more risk

AbstractResearch SummaryUpper echelons research has generated insights into the organizational consequences of CEO narcissism. However, fewer studies have empirically attended to the mechanisms through which these consequences occur. Using the attention‐based view, we introduce a process model examining how CEO narcissism is linked to corporate risk‐taking through the board of director discussion tone of risk‐taking during board meetings. We further note that narcissistic CEOs have an increased ability to do so when they are appointed to be board chair. We find strong support for each of our hypotheses by utilizing a unique data set of corporate board meeting transcripts encompassing 88 public firms and 197 CEOs over 20 years. Our results suggest that narcissistic CEOs are adept at controlling the attentional foci of boards of directors to get their way.Managerial SummaryOur study offers an explanation as to how CEO narcissism influences firm risk‐taking behavior. Specifically, we demonstrate that narcissistic CEOs are prone to drive board discussions about risk‐taking to hold a positive tone—especially when they also serve as board chair—thereby enabling them to allocate increased resources toward risk‐taking strategies. Through an extensive analysis of board meeting transcripts spanning two decades across 88 companies, we illustrate how narcissistic CEOs wield substantial influence in molding board conversations to mirror their own pro‐risk inclinations. This insight further considers the importance of understanding CEO behavior in guiding risk management strategies in the future.

CEO industry tournament, investor attention, and company value

AbstractBased on the emerging capital market of China, this paper uses the data of Chinese listed companies to test the market value management behavior of CEOs under the incentive of industry tournaments. The empirical results show that the CEOs industry tournament improves the value of listed companies by attracting investor attention. In the test of the incentive mechanism of the industry tournament, we find that in the samples with lower industry mobility and state ownership and where the CEO is new, retiring, or a founder, the industry pay gap has a weaker incentive effect on the CEO. In the test of the CEOs' efforts to manage investor attention, this paper finds that CEOs are incentivized to disclose more financial and nonfinancial information, increase advertising spending, and hold more shareholder meetings. Discussed with other incentives, compensation incentives and equity incentives enhance the motivational role of industry championships for CEOs. This study explores in depth the possible impact of industry tournaments on CEO behavioral decisions and also provides a new perspective for corporate to manage investor attention. This provides important reference value for corporate CEO compensation, information disclosure supervision, and investor decision‐making.

CEOs' hometown connections and corporate risk-taking: Evidence from China

Using hand-collected data on CEOs' hometown connections in Chinese A-share listed companies from 2009 to 2020, we find that such connections with suppliers are negatively associated with corporate risk-taking, reflected by the risk-taking behavior of CEOs with personal preference and self-interest. It is also found that the negative relationship between CEO hometown connections and corporate risk-taking is more pronounced for firms with greater economic policy uncertainty, firms in a period of tight monetary policy, firms with fewer analysts following, and firms with local CEOs, male CEOs, or CEOs without holding shares.

The moderating role of duality split on the relationship between CEO narcissism and earnings management

PurposeThe purpose of this study is to examine the moderating effect of an exogenous corporate governance shock that curbs Chief Executive Officers’ (CEOs) power on the relationship between CEO narcissism and earnings management practices.Design/methodology/approachThe authors performed a quasi-experiment using a differences-in-differences approach to examine Brazil’s duality split regulatory change on 101 Brazilian public firms during the period 2010–2022.FindingsThe main findings indicate that the introduction of duality split curtails the positive influence of CEO narcissism on earnings management, suggesting that this corporate governance regulation may act as a complementary corporate governance mechanism in mitigating the negative consequences of powerful narcissistic CEOs. Further robustness checks indicate that the results remain consistent after using entropy balancing and alternative measures of CEO narcissism.Practical implicationsIn emerging markets, where governance systems are frequently perceived as less than optimal, policymakers and regulatory authorities can draw insights from this enforcement to shape governance systems, reducing CEO power and, consequently, improving the quality of financial reporting.Originality/valueTo the best of the authors’ knowledge, this is the first study to examine whether a duality split mitigates the influence of CEO narcissism on earnings management. Thus, this study contributes to the corporate governance literature that calls for research on the effectiveness of external corporate governance mechanisms in emerging markets as well as the CEO narcissism literature that calls for research on moderating factors that could curtail negative consequences of narcissistic CEO behavior.

The Big Birthday Crisis: Exploring the Influence of 9-Ending Ages on CEO Behavior and Firm Outcomes

The Big Birthday Crisis: Exploring the Influence of 9-Ending Ages on CEO Behavior and Firm Outcomes

A Review of Chief Executive Officer Behavioral Aspects and Company Performance in Indonesia Literature

his study aims to comprehend the aspects of CEO personality and behavior on company performance in Indonesia. This study uses a Systematic Literature Review (SLR), which involves an in-depth analysis of relevant literature topics. This study found that CEOs who hold ethical leadership and are committed to the principles of good governance tend to create a work environment that is transparent and with integrity. A work culture that values honesty and accountability motivate employees, increases shareholder trust, and contributes to the company's growth. Ethical leadership, integrity, and commitment to the principles of good corporate governance are considered to have a positive impact on company performance. Besides that, less ethical and self-interest-oriented behavior can have a negative impact. However, CEO behavior that is less ethical, authoritarian, or overly self-interest-oriented can have negative repercussions, including manipulation of financial statements and conflicts of interest. We concluded that the CEO has a significant role in influencing the performance of companies in Indonesia. The development of ethical leadership, integrity, and commitment to the principles of good corporate governance are key to achieving sustainable corporate performance. The role of a responsible and integrity CEO establishes a work culture oriented towards honesty, transparency, sustainable performance and long-term success of companies in Indonesia.

When do stock options affect CEO risk‐taking? The moderating role of CEO regulatory focus

AbstractExecutive stock options are provided to risk‐averse CEOs to encourage risk‐taking. We show that the efficacy of such stock options is moderated by CEOs’ regulatory focus—their intrinsic motivations to avoid losses or achieve gains. We show that stock options have a negligible impact on the risk‐taking behavior of CEOs who are intrinsically motivated to avoid losses or take on risks. The impact of stock options on firm risk is strongest among CEOs whose regulatory focus is moderate and whose behavior is thus more malleable. Our paper shows that CEO intrinsic risk‐taking motivations have important implications for the effectiveness of extrinsic risk‐taking incentives provided by stock options.

Charitable CEOs and employee protection

In the recent surge of Environmental, Social and Governance (ESG) development, one focus is on human rights protection, while another is continuous strengthening of corporate governance mechanisms. Our study explores these by collecting data on the employee communication from firm corporate social responsibility (CSR) reports and collecting firm practices on employee protection, to examine their association with CEO charitable donations. We posit that a firm with a charitable CEO is likely to have more favorable employee protection policies. Our study of the firm's execution of labor friendly policies and communications shows that charitable CEOs are associated with lower wage inequality, more female workers, higher rate of parental leaves, fewer labor-law violations, better environmental sustainability and better corporate governance. Our results show that CEO behaviors related to empathy increase beneficial treatment of employee and firm's human rights practices.

The interplay of CEO ability and governance robustness on the performance effects of corporate social responsibility

PurposeThis study aims to investigate how the association between corporate social responsibility (CSR) and firm performance, documented in prior research, is affected by the joint effects of managerial ability and attributes of the firm's governance structure.Design/methodology/approachUnbalanced panel contains the essence of cross-sectional time-series data. A significant F-test proves the inappropriateness of pooled OLS regression to the sample. Further, the rejection of the Hausman test null favors fixed-effects over random-effects. However, statistically significant results from Shapiro–Wilk test, Breusch–Pagan test and Wooldridge test reveal non-normal distribution of the dependent variable, the presence of heteroscedasticity and the existence of first-order autocorrelation, respectively. Thus, this study applies feasible generalized least squares with panel-specific autocorrelation structure (hence, a slightly smaller sample) controlling for heteroskedasticity to all models after lagging all the explanatory variables by a year.FindingsThis study finds that higher levels of managerial ability enable firms to benefit more/less from their CSR investments depending on the presence/absence of appropriate governance devices. While CEO ability may be seen as an indicator of how well the CEO might serve the firm in the market-domain strategies, the results suggest that this may not be the case in the non-market domain in the absence of appropriate governance mechanisms.Originality/valueThe arguments and analyses in this study support two important contributions to the growing literature on CSR. First, the current study is one of the few to identify CEO ability as an important factor that may influence the dynamics of the firm's CSR (see also Garcì-Sànchez et al., 2019 and Yuan et al., 2019). Second, this study examines whether governance robustness minimizes the potential for opportunistic behavior of more able CEOs or constraints the effectiveness of more able CEOs in decisions pertaining to CSR.

Does import competition from China discipline overconfident CEOs in U.S. firms?

We examine how import competition from Chinese firms influences the behavior and investment performance of overconfident CEOs in U.S. firms. We show that the rise of Chinese import competition curbs investment and improves investment value and acquisition performance for firms with overconfident CEOs. Intensified Chinese product competition also reduces incentives for these firms to expand assets, invest out of cash flows, pursue aggressive financial policies, and increase risk exposure, and enhances their incentives to buy back shares. Overall, the evidence suggests that product market competition is an effective external governance mechanism for curbing the adverse effects of managerial overconfidence.

PENGARUH PERILAKU CEO NARSISME DAN UKURAN PERUSAHAAN TERHADAP KINERJA KEUANGAN PADA PERUSAHAAN SUB SEKTOR OTOMOTIF 2019 – 2021

The most important part that will be the handle of the Automotive company is to maximize its financial performance. The most important part to improve and achieve the goals of a company is to improve financial performance. The type of research data used is quantitative data using data that collects samples because it uses the approach explanatory reseach method to analyze and test the relationship to two variables, namely CEO behavior, Company Size being an independent variable and Company Performance being a dependent variable. The subject of this study data is to take a sample population of the automotive sub-sector & its components collected through the company's website and IDX from 2019 to 2021. Company performance is measured by ROE. The behavior of the CEO of Narcissism can be seen and assessed through the annual report of a company by posting photos. While the size of the company is calculated by natural logarithm multiplied by total sales (LnTotalSale). The conclusion was obtained that there is no influence of CEO Narcissism on company performance and Company Size on the Company Performance of the Automotive sub-sector and its components in 2019 – 2021.
 Keywords: CEO Narcissism, Company Size, Company Performance, Ln(total sales), ROE. 

Do CEO Behavior Biases and Personal Traits Influence ESG Performance? The Evidence from Emerging Capital Market of Russia

The impact of behavioral biases and personal traits of the CEO on corporate decisions and performance has become the important agenda for management, governance and finance research. But still the empirical evidence on the influence of behavioral biases on the implementation of sustainability principles into company’s strategies is missing not only inemerging markets, but for developed markets as well. We aim to fulfill this gap by findings on the role of behavioral characteristics of a CEO and how they affect the effectiveness of the ESG (Environmental, Social and Corporate Governance) approach to company management in one of the largest emerging capital market of Russia. We first focus on CEO’s optimism,narcissism, self-confidence, and the lack of confidence of the CEO and their impact over ESG performance. To identify behavioral biases, we use textual analysis and the “bag of words” method applied to the written letters to the shareholders by CEOs of Russian companies in 2017–2019 on a sample of 38 companies with official external ESG ratings.
 Our results confirm a significant influence of optimism and narcissism on the effectiveness of the ESG approach, but self-confidence does not appear to be statistically significant. Moreover, our findings prove significance of some personal traits such as industry experience and technical educational background. Our findings validate and complement prior research on personal characteristics of CEOs and provide novel data on the impact on ESG in emerging capital markets.

Dealing with pluralism: the managerial work of CEOs in Italian public healthcare organizations

BackgroundHealthcare organizations are extremely complex. The work of their CEOs is particularly demanding, especially in the public sector, though little is known about how the managerial work of a healthcare organization CEO unfolds. Drawing from scholarship on managerial work and management in pluralistic organizations, we sought to answer the questions: What is the content of managerial work of CEOs in public healthcare in Italy? How do healthcare CEOs perform their managerial work in complex interactions with multiple stakeholders?MethodsFor this study we adopted a multi-method approach in which we conducted a survey to investigate CEO behaviors, tracked CEO working time for 4 weeks, and conducted semi-structured interviews with senior CEOs.ResultsCEOs in public healthcare devote most of their time to interaction, which half of which is perceived as being occupied with apparently mundane problems. Nonetheless, devoting time to such activities is functional to a CEO’s goals because change in pluralistic contexts can be achieved only if the CEO can handle the organization’s complexity. CEOs do this by engaging in routines and conversations with professionals, creating consensus, and establishing networks with external stakeholders.ConclusionsCEOs are called to reduce fragmentation and foster cooperation across disciplines and professional groups, with the overarching aim to achieve integrated care. Using an analytical approach we were able to take into account the context and the relational dimension of the managerial work of healthcare CEOs and the specificities of this role.Trial registrationThis article does not report the results of a healthcare intervention on human participants, and the material used in the research did not require ethical approval according to Italian law.

PENGARUH NARSISME CEO DAN ARUS KAS BEBAS TERHADAP KINERJA PERUSAHAAN

Researchers are actively exploring how CEO narcissism affects CEO behavior in depth. The purpose of this study is to examine the relationship between CEO narcissism and the company's free cash flow to company performance. Quantitative research methods were used in this research with purposive sampling which produced as many as 110 samples from the most index companies in Jakarta Islamic Index from 2017 to 2021. Testing this study using the SPSS 26 application. The results of this study obtained empirical evidence that company performance is not influenced by the narcissistic behavior of narcissistic CEO. The company's performance is affected by the free cash flow available for investment. Simultaneously the narcissism of the CEO and free cash flow successfully affect the performance of the company.

Short Selling and Managerial Ability

ABSTRACT Using a balanced panel of treatment and control firms based on Regulation SHO of 2004 which suspended short sale price tests for a third of the stocks in the Russell 3000 index, we examine the impact of short selling on managerial ability. We found evidence that short selling enhances managerial ability in treatment firms during the period in which short sale price tests were suspended. Subsample analysis suggests that our results could be interpreted within the context of risk-taking behavior of CEOs.

Changes in CEO stock option grants: A look at the numbers

We study changes in the number of CEO stock option grants. Despite some evidence of short-term rigidity, the number of options granted changes frequently over time. CEOs of firms with unusual investment patterns subsequently receive fewer stock options as part of their compensation packages. CEOs who hold exercisable deeply-in-the-money options (overconfident CEOs) also receive fewer stock options in subsequent periods. Our results show that past CEO behavior predicts stock option grants. These insights can inform theoretical discussion on option-granting behavior and, more broadly, on the board's re-contracting process.

High-temperature oxidation behavior of CeO2-doped MAO coatings on TC4 titanium alloy

To improve the surface micropores and high-temperature oxidation resistance of micro-arc oxidation (MAO) coatings on TC4 titanium alloy, cerium dioxide (CeO2) particles were introduced into the electrolyte to prepare MAO composite coatings with different cerium dioxide contents. An X-ray diffractometer, a scanning electron microscope and a multifunctional material surface performance tester were used to analyze the phase composition, surface morphology and bonding force of the samples, respectively. The TC4 substrate, undoped MAO sample and optimally doped MAO sample were oxidized at 650, 750 and 850°C, respectively. The results show that the best-doped MAO samples show excellent high-temperature oxidation resistance at the three temperatures. Compared with the maximum oxidation weight gain per unit area of the undoped MAO sample, that of the optimally doped MAO sample decreased by 10.8, 19.6 and 22.1%, respectively. This is mainly because the thickness, hardness and adhesion of MAO coatings are all increased by doping cerium dioxide particles, and a dense protective layer can also be formed on the surface of the TC4 substrate. The invasion of the oxygen medium is effectively prevented. In this research work, the optimal addition amount of cerium dioxide is 6 g/l.

Trading behavior of institutional investors and CEO's market timing

We use excess return, risks, MB ratios, and cumulative abnormal return as proxies to examine the CEO's market timing. The empirical results indicate that CEOs have been exactly in timing the market for Seasonal equity offering (SEO) events. CEOs have more incentives to execute seasonal equity offering when CAR reach peak and market risk drop to the lowest point that investors become less worried about risks. Evidence also shows that institutional investors do not own insider information before SEO but when issuance date appears, they recognize that CEOs are exploiting insider information in order to issue stocks at the highest price. Hence, the institutional investors switch their trading behavior from long positions to short positions to dodge the potential losses inflicted by the CEO's market timing. The fund manager recognizes that CEOs are implementing market timing so they can earn a positive return in the future. In contrast, security dealers and foreign investors do not recognize the CEO's market timing action, so they do not react, resulting in negative returns in the future.