CEO Influence Research Articles

The ‘CEO’ Effect on the Performance of Brazilian Companies: An Empirical Study Using Measurable Characteristics

The experience and competence of CEOs may have a positive influence on the performance of firms. Using secondary data on the performance of 73 Brazilian listed companies and primary data collected through a survey of the social and demographic characteristics of CEOs we tested a set of hypotheses concerning the influence of CEOs on the performance of the firms they headed between 1997 and 2012. Specifically, we examined the relationships between CEOs’ experience and competence regarding common accounting indicators. The results indicate that CEOs with diverse experience would not do better in dynamic environments, and that specific experience has a negative effect on performance. Furthermore, CEOs with formal education do not show better short‐term performance, and tenure has an inverted U‐shaped relationship with the firm's performance. This article helps to provide a better understanding of the behavior of Brazilian CEOs by examining their characteristics.

The Face of the Firm: The Influence of CEOs on Corporate Reputation

It is widely assumed that CEOs shape how people view firms, but the question of how these leaders influence corporate reputations has received little theoretical or empirical attention. This study ...

CSR Programs in South Korean Firms: The Influence of Chaebols and CEOs

Examining CSR programs in South Korea, this manuscript focuses on the family-owned business groups, chaebols, and CEO characteristics on the initiation of CSR programs. Chaebols provides a unique c...

Identity and Leadership: Exploring the Intersections between Who We Are and How We Lead

The individual domains of identity and leadership have received significant attention within the management and organizational realms, each covering a plethora of interesting and important topics. Scholars from various theoretical stances have linked leadership and identity, establishing relationships and offering theories and evidence supporting the significance of this marriage. Our reading of this literature is that the union of these phenomena is not only promising but also at a stage where a symposium that draws attention to the interplay between leadership and identity would be quite beneficial. Therefore, we organized this symposium with three primary objectives: 1) to draw attention to the growing body of scholarly work that binds identity and leadership; 2) to present four current research endeavors that each uniquely relates identity and leadership; and, 3) to demonstrate the importance of uniting these two domains within a forum that spurs opportunities for future exploration. Our proposed symposium involves four presentations that are diverse in multiple ways: their content; the contexts in which they are studied (i.e., corporations and military units); their methods (quantitative, qualitative, and conceptual); and in the level of leadership analyzed (i.e., CEOs, supervisor, and coworker levels). More specifically, the four presentations examine a wide swath of theoretically and pragmatically important questions, including: 1) how charismatic leadership primes increased identification of followers through three levels of identity; 2) how leaders influence the relational identification and resilience of their newcomer subordinates; 3) how relational identification influences the behaviors of dyadic team members engaged in a shared leadership context; and 4) how “self-transcendent” values embraced by an organization and its CEO influence members, customers, and partners of the organization. Shared Leadership in Teams: The Effect of Relational Identification on In-role Performance Presenter: Philipp Bubenzer; School of Management Fribourg/ U. of Applied Sciences Western Switzerland

Internationalization process, impact of slack resources, and role of the CEO: The duality of structure and agency in evolution of cross-border acquisition decisions

This paper examines how the internationalization process evolves. We do so by examining the cross-border acquisition (CBA) decisions of multinationals under the contingent impact of slack resources and CEO power and influence. Grounding our arguments in Giddens’ (1984) structuration theory, we identify how and why path-dependencies associated with CBA decisions give way to strategic change, demonstrating the duality of structure and agency in this evolutionary process. Further, we show that organizational slack and CEO overconfidence affect this relationship, albeit in dramatically different ways. Our hypotheses are tested on a large sample of 4812 CBAs of U.S. firms during 2000–2010, across 41 industries and in 44 target countries. The results hold for acquisition trajectories of multinationals in both categories of CBA decisions: majority as well as minority-owned.

CEO Intellectual Stimulation and Employee Work Meaningfulness

This study examines the influence of CEOs’ intellectually stimulating behavior, namely, encouraging followers to bring up new perspectives and innovative approaches at work, on employees’ perceptions of the meaningfulness of their work. Drawing from a collective sensemaking lens, we predicted that such CEO behavior would have a greater impact on experienced meaningfulness of work in contexts in which inputs to attributing meaning are less certain and clear-cut. Specifically, we examined the moderating roles of firm performance and industry dynamism. We surveyed the CEOs and employees from 43 firms in innovation-driven industries. Our results show lower firm performance or rapid and unpredictable changes in the industry are associated with a stronger positive relationship between CEO intellectual stimulation and employee work meaningfulness. We discuss the implications of our findings for organizational leadership practices.

CEO influences on firms' strategic actions: A comparison of CEO-, firm-, and industry-level effects

This study investigates the importance of CEO-level effects for firms' strategic actions, compared with the impact of firm- and industry-level effects. Strategic actions reflect the firm's competitive initiatives and choices regarding financial issues and resource allocation. Drawing on strategic leadership theories, the resource-based view, industrial organization economics, and the reconciling approach of managerial discretion, this study proposes that the CEO's influence varies across different categories of strategic actions. By applying a variance decomposition approach to a 20-year sample of 110 firms in 10 industries, the authors reveal that for competitive initiatives, CEO-level effects are associated with the largest amount of variance, together with firm-level effects. Contrary to expectations, firm-level effects are most relevant for financial choices, followed by CEO effects. Resource allocation depends mainly on firm-level effects, rather than on CEO- or industry-level effects.

How CEO experience, personality, and network affect firms' dynamic capabilities

As the organizational influence of CEOs is particularly critical in changing environments, we investigate the impact of their experience, personality, and network on dynamic capabilities. In particular, we analyze the direct effects of CEOs' human capital and core self-evaluation on DCs, and in this context specifically on marketing, R&D, and production capabilities. Furthermore, we examine the direct effect of social capital on dynamic capabilities. Based on data provided by 295 CEOs, we empirically analyze linear and non-linear relationships. Our results reveal an inverted U-shaped relationship between CEO age and dynamic capabilities, and a positive impact of CEO tenure, core self-evaluation, and solidarity on dynamic capabilities. Our overall contribution is the identification and proof of meaningful new relationships among existing as well as new variables of upper echelon and dynamic capabilities research.

CEO Political Ideologies and Pay Egalitarianism within Top Management Teams

This study examines the influence of CEOs’ political ideologies on top management teams (TMT) pay arrangements. Given that politically liberal CEOs tend to believe in the importance of egalitariani...

Beyond Independence: CEO Influence and the Internal Operations of the Board

Using a detailed dataset on the meeting sub-structure of the board to create various measures capturing CEO involvement in the internal decision-making processes of the board, this paper investigates the time trends as well as the cross-sectional determinants of internal boardroom control. First, I document that the principal governance reform following the corporate scandals of 2000-2002 was the removal of the CEO as a participating and voting member in board operations - both in terms of board oversight (monitoring) and investment decisions. Consistent with this being against the preferences of the average CEO, I find that CEO power is negatively related to board monitoring work being handled outside of the CEO's presence and positively related to board-time spent in the executive committee. Together, the results highlight that the governance standards of the modern board are not only defined by the composition and size of the board, but also by its internal operating form.

Matching Directors with Firms: The Roles of Industry Expertise and CEO Influence

Following corporate spinoffs, unit boards are formed from scratch. We find that these ‘de novo’ boards are smaller, more independent, include more outside directors with relevant industry expertise, and derive more industry expertise from outsiders than do industry and size-matched peers. These differences are observed only when the unit CEO was not the CEO or a director of the pre-spinoff parent firm – i.e., when there is a greater need to assess the CEO’s ability and match with the firm. We conclude that the need for CEO assessment is an important element of the structure of newly formed boards.

Determinants of corporate board structure in Taiwan

This study examines the determinants of board structure for Taiwanese firms by reviewing their board elections, held between 1991 and 2009. The paper emphasizes three factors: the distinction between insider-affiliated and non-insider-affiliated outside directors based on family relationships, governmental agency theory-based regulations, and the firm's choice between agency and stewardship governance philosophy. Evidence has shown that the proportion of non-insider-affiliated outsiders on the board is sensitive to changes in firm and CEO characteristics, and to changes in government regulations. Government regulations significantly shape corporate boards, encouraging a smaller size, more outside directors, and fewer insider-affiliated outside directors. For firms adopting agency and stewardship theories as governance arrangement, the determinants of board structure are diverse. The board structure of principal–steward firms is less susceptible to changes in firm characteristics but more susceptible to CEO influence, and more responsive to government regulations.

Governance in the Executive Suite and Board Independence

The overall independence of a firm’s governance system depends not only on the independence of its board of directors but also on CEO influence over the other top executives. We find that board independence and independence from CEO influence in the executive suite are inversely related. Difference-in-difference estimates using a regulatory shock reveal that strengthening board independence weakens executive suite independence, which is proxied by (the inverse of) the fraction of top executives appointed by a current CEO. We also find that the greater the increase in the fraction of the current CEO’s appointees in the executive suite, the lesser the improvement in monitoring CEO compensation and the lower the shareholder value enhancement in the aftermath of the regulation. These findings imply that one cannot infer overall independence based on board independence alone and that strengthening a specific governance mechanism by regulation can have undesirable spillover effects to a seemingly unrelated governing body.

CEO characteristics and corporate tax planning evidence from US companies

This study investigates whether CEO characteristics influence tax planning in US firms during the period 1996–2009. Inspired by the upper echelon theory, we develop a new tax context and postulate our hypothesis. The results of our study reveal that the educational level and specialty of the CEO influence significantly the tax strategy used by the firm. However, we do not find significant relations between tax planning and the other variables of our study (experience, seniority, age). We contribute to the recent literature on tax planning by proposing that the CEO influence indirectly the fiscal decision-making through his exemplary attitude.

The Role of the Board and CEO Influence in Earnings Manipulation

CEOs consistently experience enormous pressure to respond to market demands and to increase firm earnings on a regular basis. This study examines the contexts under which they engage in financial m...

The retention of directors on the audit committee following an accounting restatement

Prior research suggests that corporate directors suffer the loss of outside board positions following a financial reporting failure. This loss of board positions, however, does not occur at the same rate for all outside directors. To examine this apparent discrepancy between director actions and consequences, I examine whether the retention of individual directors on the audit committee is related to director characteristics and/or CEO influence over the board of directors. Results indicate that the retention of directors on the audit committee is positively related to the influence of the CEO and weakly related to the qualitative characteristics of the audit committee member. I then classify my sample of restatements based on their underlying cause and re-examine the retention of audit committee members at restating firms. Results suggest that the involvement of the CEO in the nominating process can affect the composition of the audit committee at firms where restatements are the result of intentional misapplications of GAAP.

When do leaders matter? Ownership, governance and the influence of CEOs on firm performance

Leadership and strategic management research suggests that the extent to which CEOs influence performance largely depends on the presence or absence of certain factors. These factors may include the characteristics of the task at hand, subordinates, the organization itself or the external environment. Among these factors, a fundamental contingency that has received little empirical attention is an organization's ownership and governance structure—that is, who owns and monitors the organization. In this paper, we outline how different ownership and governance structures can present the opportunity for, or limit, leader influence and empirically examine the extent to which CEO effects on financial performance depend on these structures. Examining organizations in the same industry but with different ownership and governance structures, our results suggest that these structures are closely aligned with the degree to which CEOs influence firm performance. Our findings support the notion that leaders matter most when ownership and governance structures correspond with a weak or ambiguous institutional logic. This study contributes new insight into the “opportunity structure” of CEO influence, that is, the organizational factors that shape leader discretion and, hence, condition the CEO's level of influence over firm performance.

Social Discrimination in the Corporate Elite

This study examines social discrimination in the attributions that top executives make about the performance of other firms with minority CEOs in their communications with journalists. Drawing from the literatures on intergroup relations and status competition, our theory suggests how out-group biases and negative forms of envy toward higher-status minority CEOs may increase the propensity for white male CEOs to make negative or internal attributions for the low performance of the minority CEOs’ firms. We also examine how CEOs’ internal attributions in conversations with journalists increase the tendency for those journalists to attribute performance to internal causes in reporting on the minority CEOs’ firms. We consider how the gender and race of journalists could moderate the influence of CEOs’ performance attributions on journalists’ reports, such that female or racial minority journalists would be less easily persuaded by white male CEOs’ internal attributions for the low performance of firms with female or racial minority CEOs, and thus less prone to issuing negative statements about the CEOs’ leadership. Empirical analyses based on original survey data from a large sample of CEOs and journalists provided strong support for our hypotheses. We discuss implications of the findings for theory and research on social discrimination in the corporate elite and social psychological determinants of corporate leader reputation.

SEC Division of Corporation Finance Monitoring and CEO Power

SUMMARYSection 408 requires the Securities and Exchange Commission (SEC) to review the filings of all SEC registrants every three years. Our study investigates this SEC monitoring role and differs from past SEC research by focusing on the SEC Division of Corporation Finance (DCF) rather than the Division of Enforcement and specifically on DCF's “review and comment” monitoring role. We rely on past theoretical research in management, finance, and accounting that provides us with arguments suggesting the DCF may target companies with strong CEOs and weak monitoring. Our findings cast light on the power struggle between the board and CEO by suggesting that the CEO's influence over the board may adversely affect board oversight. In addition, our results indicate that the DCF-prompted restatements lead companies to re-evaluate their governance structure.

How do public companies adjust their board structures?

We show that public companies frequently changed their board structures before implementation of the Sarbanes–Oxley Act, with two-thirds of firms changing board size or independence during an average two-year period. Board changes were associated with changes in firm-specific fundamentals, but the rate of change toward predicted structures was negatively associated with the level of CEO influence. Companies changed board structures in either direction as underlying firm fundamentals changed, consistent with the pursuit of economically efficient board structures. However, board changes have become less frequent since the Sarbanes–Oxley Act was enacted. We provide some evidence that companies became less likely to decrease board independence when changes in fundamentals suggested they should, which may reflect a loss of economic efficiency.