CEO Values Research Articles

Do CEOs matter to corporate social (Ir)responsibility? A meta-analytic investigation

Following high-profile corporate scandals and continued questions about the role and obligation of corporations beyond financial metrics, CEOs have attracted considerable public and research attention with respect to their firms’ social performance. Research attention examining the link between CEOs and social performance has developed along two largely separate paths: corporate responsibility and irresponsibility, neither of which have been empirically summarized. In this paper, we meta-analyzed over 500 empirical studies to estimate true correlations between five broad categories of CEO characteristics (demographics; personality, leadership, values; CEO power; CEO experience; other characteristics) and firm-level social performance as indicated by both broad and narrow measures of social responsibility and social irresponsibility. We find that CEO gender, CEO values, CEO narcissism, CEO duality are significantly associated with social (Ir)responsibility. We discuss implications for upper echelons research, as well as practical implications of our findings.

CEO Career Variety As Behavioral Antecedent Of Organizations' Strategic Alliance Portfolios

This study takes a behavioral perspective on the antecedents of strategic alliances. Considering the impact of CEOs on their organization’s strategic choices and behaviors, career variety and its motives pose a particularly influential and interesting executive characteristic. By analyzing a multiyear sample of the S&P 500 companies, this study offers two main contributions to management research: 1. The study connects TMT research with strategic management research to reveal a TMT-based antecedent of a firm’s composition of strategic alliance portfolios. 2. We introduce a novel concept to analyze and understand the influence of career variety as an observable characteristic. Results propose that while the alliance portfolio size increases with an increasing level of career variety of a CEO, mid-ranged executives are most capable of creating a balanced and ambidextrous strategic alliance portfolio as well as a healthy mix of competitive and non-competitive partnerships. These results contradict current market mechanisms revealed by previous studies, which point to an increasing market value of CEOs with greater career diversity.

The value of managerial ability and general ability for inventor CEOs

Although inventor CEOs drive firm innovation, widely recognized CEO abilities—general ability or managerial ability—could be central to leveraging CEOs’ invention abilities to drive firm innovation. Using CEO copatentors’ invention ability (defined as CEO patent coauthors’ average number of forward citations over the average number of patents) as an instrument for inventor CEOs, we study the value of CEOs’ general ability and managerial ability in enhancing the influence of inventor CEOs on firm innovation. Firms led by inventor CEOs with higher general abilities spur greater firm innovation. Surprisingly, however, firms led by inventor CEOs with a higher level of managerial ability realized lower firm innovation. Inventor CEOs with greater general abilities also translate firm innovation into better product-market outcomes and spur more firm innovation under better corporate governance. Our findings have implications for the influence of an inventor CEO on firm innovation outcomes.

CEO early‐life disaster experience and corporate social performance

AbstractResearch SummaryDespite an extensive upper echelons literature on how CEOs' prior experiences influence firm behavior, we know little about the influence of traumatic experiences early in CEOs' lives. Drawing on post‐traumatic growth theory, we describe how traumatic experiences early in CEOs' lives influence corporate social performance. Our theory points to the asymmetric impact of CEO early‐life trauma on responsible and irresponsible corporate social performance and to two boundary conditions: CEO age at the time of the traumatic event and the severity of the event. We develop and test our arguments in the context of large‐scale disasters experienced early in the CEO's life. Our findings advance strategic management research on the relationship between CEO experiences and firm outcomes.Managerial SummaryWe consider how traumatic experiences in childhood shape CEO cognition and values and, therefore, firm behavior. Our findings suggest that CEOs who have had to deal with traumatic early‐life events may gain psychological strength from such experiences and that their psychological growth informs firm conduct. Specifically, our findings indicate that experience of trauma early in the CEO's life is positively associated with corporate social performance. The implication is that boards aspiring to enhance this aspect of corporate performance may wish to consider the early‐life experiences of prospective CEOs. While early‐life experiences are unlikely to feature on a prospective CEO's résumé, the typical selection process for senior executive appointments is well placed to unearth executives' life histories.

CEO Values, Firm Long-Term Orientation, and Firm Innovation: Evidence from Chinese Manufacturing Firms – Addendum

An abstract is not available for this content so a preview has been provided. Please use the Get access link above for information on how to access this content.

A Bullshit Job? A Global Study on the Value of CEOs

This paper presents strong evidence that existing studies overestimate the impact of CEOs on the performance of the firms they lead. Ours is a comprehensive study of more than 3,692 CEOs in 2,103 firms in 22 countries, and for the period 1991-2019. Our objective is to assess the direct impact of CEOs on firm results--measured as Total Shareholder Return and ROIC--after controlling for global, country, industry, and firm effects. Like the previous literature, we find that a CEO dummy explains 2 percent of the variability of stock returns, and 12 percent of the variability in firms' return on invested capital. However, we show that such relationship is driven by CEOs having an average impact that is economically unimportant, with some CEOs positively affecting performance, and some others destroying value. In fact, analyzing results for the best and worst performing firms, we find that CEOs only improve value in good companies, but destroy value in underperforming firms. Additionally, there is no firm or CEO characteristic (except for CEO tenure) that systematically explains their impact on performance: characteristics such as gender, age, and compensation do not make a difference. This suggest that firms hire top executives for reasons different from their inherent ability to contribute to performance, so CEOs end up doing well only if their firms do well, but not vice versa.

Entrepreneurial orientation and firm performance in a sanctioned economy – does the CEO play a role?

PurposeEntrepreneurship, in many low-resilient economies, plays a critical role in overcoming external shocks. Thus, it is crucial in such situation that entrepreneurial firms can survive and even grow so that the whole economy can benefit from a higher level of resilience. The purpose of this study is to understand how entrepreneurial orientation (EO) brings about firms' performance through the moderating role of CEOs' self-transcendence values in the context of a low-resilient sanctioned economy.Design/methodology/approachThis is a quantitative research that employs hierarchical regression analysis of a sample of 114 Iranian entrepreneurial firms composed of 62 knowledge-based and 52 creative firms.FindingsThe analysis revealed that in the low-resilient sanctioned economy, Iran, EO-performance link is moderated by the level of CEOs' self-transcendence value, that is, higher level of CEO self-transcendence leads to stronger impact of EO on performance. This moderation is not different in creative sector vs. knowledge-based sector of the economy.Originality/valueThis paper addresses a major gap in the traditional EO-performance relationship which is related to the role of CEO values. Also, the context of Iran's low level of economic resilience adds more novelty to this study, emphasizing on the role of CEO personal values of self-transcendence in times of crisis. The results could also be generalized in many economies now facing the COVID-19 pandemic crisis during which CEOs' self-transcendence values are vitally important in overcoming the difficulties of doing business in such situation.

CEO outside directorships and managerial efficiency: The role of host board capital

AbstractResearch Question/IssueDo CEO outside board directorships improve or reduce CEO managerial efficiency? What is the role of host board capital in this relationship?Research Findings/InsightsWe explore the value of CEO outside directorships on managerial efficiency by identifying a unique empirical setting where a CEO's number of outside board seats is exogenously decreased by a merger that eliminates the board of a host firm the CEO is serving on. Using this event as our empirical instrument, we find that outside directorships decrease a CEO's managerial efficiency while host board capital reduces this effect.Theoretical/Academic ImplicationsProponents view outside board service as a valuable leadership development tool to mentor the CEO while others promulgating an agency view argue that outside board service detracts from the CEO's ability to improve the efficiency of the home firm as it leads to busyness of the CEO. We shed light on this debate by arguing that CEO outside directorships might reduce CEO's managerial efficiency; however, this effect might be contingent on the characteristics of the host board.Practitioner/Policy ImplicationsOur findings offer insights to practitioners about the value of multiple directorships and the importance of the host board capital while informing policy makers about the potential restrictions on outside board assignments.

CEO's Overconfidence, Cost stickiness, and Value Relevance of Accounting Information

CEO's overconfidence is one of the essential indices that influences financial policies. When sales decline, overconfident CEOs have overconfidence in their ability to bring sales back to the previous level and tend to overestimate sales, thereby increasing cost stickiness. Further, cost stickiness by manipulating the natural and expected costs process can affect accounting information content. Therefore, the CEO's overconfidence by influencing cost stickiness can also affect the value relevance. This paper shows that there is a positive and significant relationship between overconfidence and cost stickiness. There is also a negative and significant relationship between overconfidence and value relevance. Nevertheless, the effect of overconfidence through cost stickiness on value relevance is not confirmed.

The Influence of CEO Values on Firm Open Innovation

Prior research has focused on exploring the factors promoting openness in innovation from firm characteristics, industrial economy and environmental determinism perspectives, while the “microfoundations” of open innovation remain relatively ill understood. Our study attempts to fill the research gap by investigating the “human side” of open innovation, with a focus on the fundamental determinants of CEO values. Using a three-phase (from 2014 to 2016) survey of 655 Chinese manufacturing firms, we find that firms with CEOs who have higher other-regarding values are more likely to adopt open innovation, and this main relationship is enhanced in state-owned enterprises, while weakened by a higher level of recent innovation performance or regional intellectual property protection. This research enriches the open innovation literature by exploring the role of CEO and by providing empirical evidence to depict how individual, organizational and environmental level factors interacted affect firm-level openness and further innovation performance.

What Drives the Mismatch in CEO Value Creation and Value Capture?

We examine the relationship between contribution of CEOs to value creation and their pay. Findings demonstrate that this relationship is not as aligned as predicted by traditional strategic human capital literature. We identify CEOs and firms where this relationship is misaligned and test some determinants of this misalignment. This study is among the first to directly examine the relationship between variation in managerial value creation and managerial value capture.

Mortality Salience and CSR: The Moderating Roles of CEO Values and Ideology

Existing research has made contradictory arguments regarding how death saliency affects individual behavior. Some research suggests that individuals exposed to death salience reduce prosocial behaviors, while other research suggests that death salience actually leads individuals to engage in more prosocial behavior through death reflection process. Integrating terror management theory with strategic leadership research, this study investigates the micro-foundations of corporate social responsibility (CSR) and theorizes that CEOs’ values and ideologies, particularly personal values for benevolence and political ideology, interact with mortality salience to affect the extent to which their firms engage in CSR strategies. In a longitudinal study of U.S. publicly listed firms, we use death of directors in firms during 2002-2013 as exogenous shocks to CEOs and examine the effects of death salience on CSR. We predict and find that when exposed to death salience, CEOs with greater benevolence values are more likely to engage in CSR practices and CEOs who are political conservative are less likely to engage in CSR. In a supplementary study using an experimental design and primary data from working professionals, we find further evidence that provides support for our predictions.

COVID-19 and the Value of CEOs: The Unintended Effect of Soccer Games across European Stocks

We investigate whether markets anticipate the potential loss of firm value in the event of the CEO falling sick and eventually dying of COVID-19 in a sample of almost 3,000 firms from across 137 regions in 10 European countries. We use soccer games as “super-spreader” events to instrument the regional number of infected cases per capita. There is a significant drop in stock returns during March and April 2020 associated to firms run CEOs older than 60 years. This result vanishes when the cases are not instrumented, and when we replace the company’s CEO with the Board Chair or other Board members. Returns bounce back in May for the same firms after the incidence of the pandemic receded in Europe.

How Do CEO Values Influence IPO Speed? A Conceptual Analysis from the Upper Echelons Perspective

The present article addresses the important, but widely neglected subject of initial public offering (IPO) speed that indicates how rapidly a firm develops from its foundation to be publicly listed. We argue that the time that elapses between start-up and going public depends on characteristics of the CEO who tends to largely influence the timing of the IPO decision. Based on conceptual analyses that combine upper echelons theory and the five-factor model of personality traits, we reveal a complex set of propositions about the direct effects of certain CEO values on IPO speed as well as about CEO- and firm-related variables that moderate these relationships. More specifically, we propose that the degrees of the CEO’s emotional stability, extraversion, openness to experience as well as risk propensity tend to be positively associated with IPO speed, whereas the CEO’s agreeableness and conscientiousness tend to decelerate the pace of going public. These effects tend to be stronger when the CEO is the founder of the firm, holds also the position of a chairperson (CEO duality) and/or owns substantial stakes of the company’s equity. Firm size and the size of the top management team tend to weaken these direct relationships.

CEO Duality and Firm Value: Evidence from Mexico

Regulators and corporate governance activists are lobbying companies to eliminate the CEO duality; however, the effectiveness of this recommendation is questioned given that empirical evidence has found conflicting results. This document studied the effects of the CEO’s duality on the value of the company in a sample of 104 Mexican companies that were publicly traded between 2000 and 2013. For this, different regression models were estimated using the ordinary least squares technique. The firm value was measured through Tobin’s Q and ROA. Empirical results showed that there is no relationship between CEO duality and value after controlling for board characteristics such as size and independence.

CEO Pet Projects

Using hand-collected data on CEOs’ personal assets, we find that CEOs prioritize corporate investment projects that increase the value of CEOs’ private assets. Such pet projects are implemented sooner, receive more capital, and are less likely to be dropped. This investment strategy delivers large personal gains to the CEO, but selects lower NPV projects for the firm and erodes its investment efficiency. Using information from CEOs’ relatives as an instrument for the location of their private assets, we argue that these effects are causal. Overall, we uncover CEOs’ private monetary motives in capital budgeting decisions.

CEO Values, Firm Long-Term Orientation, and Firm Innovation: Evidence from Chinese Manufacturing Firms

ABSTRACTInnovation contributes to a firm's long-term competitive advantages but also involves significant risk and uncertainty. As agency theory predicts, CEOs are self-interested and risk-averse, and thus are reluctant to engage in innovation investments. However, the extent to which CEOs are self-interested and the mechanisms through which self-interested CEOs affect firm innovation have not been empirically tested. To fill this gap, we propose that CEOs possess a mix of both self-preserving and other-regarding motives, and build a mediation model in which CEO values affect firm innovation via firms’ long-term orientation. Based on a three-phase (from 2014 to 2016) survey of 436 Chinese manufacturing firms, we find that CEOs with high self-regarding values reduce innovation efforts and performance by damaging a firm's long-term orientation. Moreover, CEO tenure, CEO duality, and environmental uncertainty weaken the relationship between CEO values and firm innovation via long-term orientation. Our study enriches the innovation literature by extending the basic assumptions of agency theory and by providing empirical evidence to determine whether and how self-regarded CEOs affect firm innovation.

The value of CEOs' supply chain experience: Evidence from mergers and acquisitions

Acquirer CEOs with experience in the target's industry supply chain (‘supply chain CEOs’) are associated with wealth effects of first-order importance: they earn 1.5% higher merger announcement returns. Conversely, their targets get a lower share of the merger gains. Acquisitions by supply chain CEOs also exhibit higher synergies, better post-deal accounting performance, and less goodwill written off. These findings withstand checks for endogeneity, anticipation bias, and numerous robustness tests. In takeovers by supply chain CEOs, superior acquirer performance stems from both value creation and rents negotiated away from target shareholders.

Selfishness and Selflessness – The Importance of CEO Values for Explaining Financial Fraud

Current explanations of corporate fraud, centered on external and internal governance mechanisms, have ignored the role of heterogeneity in innate psychological tendencies of CEOs. We integrate upper echelons theory with value activation and behavioral ethics theories from psychology to highlight the pivotal role of CEO values – broad, desirable goals (e.g., power, equality) that are people’s guiding principles to life – in predicting the likelihood of financial fraud. We focus on the most fundamental dimensions of personal values – CEO self-enhancement (selfishness) and self-transcendence (selflessness). Our results highlight how the interplay of CEO values and CEO stock options predicts corporate fraud. These results extend existing research on corporate fraud by bringing heterogeneity in CEO values to the forefront of understanding financial fraud.

Star Turnover and the Value of Human Capital—Evidence from Broadway Shows

Theater shows routinely turn over actors in lead roles. Otherwise, the show stays the same, including the director, the script, other actors and, the physical theater environment. Even the lines performed do not change the set. Therefore, the theater provides a unique laboratory for assessing the value of human capital to an enterprise, a question that has been studied in other contexts, including the CEO value literature. We compare revenues, capacity, and ticket prices just before and just after transitions of top cast members. We also characterize the performers in various ways and control for the attributes of the show and for team characteristics. We find that decorated theater stars significantly affect the financial success of theater shows, supporting the MacDonald version of the superstar hypothesis. Movie stars and celebrities do not seem to affect ticket prices or show revenues. Teams and seasonal effects seem to matter as well. This paper was accepted by Renee Adams, finance.