CEO Tenure Research Articles

The Influence of CEO Character on Tax Avoidance In Property And Real Estate Companies Listed on The Indonesia Stock Exchange 2020-2021

This study analyzes and obtains empirical evidence on CEO character, including CEO age, CEO tenure, CEO education level, and CEO gender in tax avoidance. This study uses a sample of the property and real estate sectors listed on the Indonesia Stock Exchange (IDX) during the 2020-2021 period. The number of companies that are sampled are 64 companies with observations for two years using the purposive sampling method-the hypothesis testing of this study uses multiple regression models. The results showed that the CEO's education level and CEO's age had a positive effect on tax avoidance. While CEO tenure, gender does not affect tax avoidance.

Attunement theory, CEO's cyclical influence on corporate social responsibility and firm value

PurposeThis paper aims to further contribute to the growing stream of literature on the CEO's impact on corporate social responsibility (CSR). The authors shed light on the implications of attunement theory on which relatively less research has been done. Furthermore, this paper strives to reconcile contradictory findings of the effect of CEO tenure on CSR and use the immediate changes of CSR enacted by the new CEO upon firm value.Design/methodology/approachThe empirical strategy of the paper is centered around CEO transition. Applying first difference model, the authors identify a tenure-varying pattern of CEO influence on CSR. Moreover, the authors base the analyses of CSR value relevance on the sudden change of CSR during CEO transition, and use a within-industry matching approach as the inferential strategy. Manual data collection is conducted extensively for robustness checks.FindingsThe authors find that CSR activities change drastically at the beginning of the new CEO's ascendancy. One exception to this general pattern of CSR policy change is when the new CEO is brought from outside the organization, a result supporting the attunement theory. The authors find that firm value increases (decreases) when the new CEO increases (decreases) the CSR investment above (below) the industry norm.Originality/valueThis paper is among the first ones in the extant literature that directly examines the analytical implications of attunement theory concerning the CEO's impact on the firm's CSR policies. Furthermore, the positive association between CSR and firm value corroborates the arguments of instrumental stakeholder theory.

CEO Determination on Indonesian Coal-Based Enterprises Performance

The continuous increase in Indonesia's coal production shows an increase in the firm performance. This study aims to examine the determination of CEO characteristics on coal-production-based companies in Indonesia. Using data from coal production sub-sector companies in Indonesia, this study applies a panel data regression analysis method with a total sample of 15 companies from 2016 – 2020. The results show that CEO attributes such as CEO Duality have a significant positive effect on company performance while CEO Tenure and CEO Ownership have no effect on company performance, but CEO Education has a significant negative effect on company performance and the composition of external commissioners has no significant effect on the company's performance.

Do CEO Characteristics Matter in Product Recalls?

This study examines the effect of CEO characteristics such as gender, age, tenure, functional background, stock ownership, compensation scheme and dual role on the stock market returns of automobile companies, around the announcement of product recalls. Using an event study, for a sample of 2,576 product recalls in the US automobile industry, between January 2010 and June 2021, we observe that the stock market’s reaction to a product recall announcement is negative. However, the impacts on the cumulative abnormal returns around the announcement of product recalls of the company’s CEO being female, the CEO tenure, the CEO having an operations or marketing background, the ratio of CEO long-term compensation to total compensation and the CEO and Chairperson being the same person are all positive and statistically significant, showing that these CEO characteristics mitigate the negative effects on a company’s financial value caused by product recalls.

CEO Greed, Corporate Governance, and CSR Performance: Asian Evidence

In this study, we examined the association between CEO greed and corporate social responsibility (CSR) performance with a particular emphasis on the curtailing role of corporate governance. We found that CEO greed has a negative effect on CSR, since an uncontrolled pursuit of personal gain typically reveals myopic behavior and the foregoing of investment in CSR by a greedy CEO. Additionally, we found that CEO compensation in the form of large bonuses, support, and restricted stocks options weakened the link between CEO greed and CSR. Concerning the power dynamics amongst CEOs (CEO duality and tenure), we found that CEO duality moderates the negative relation between CEO greed and CSR. We also explored the curtailing role of corporate governance (proxies represented by board gender diversity and board independence) in the association between CEO greed and CSR. Our findings show that gender diversity curtails the negative effect of CEO greed on CSR once it reaches critical mass on the corporate board. Gender critical mass also curtails the negative impact of CEO greed on CSR, even if the CEO exercises duality. Our findings have empirical and practical implications. This study contributes to the existing literature by exploring the relationship between CEO greed and CSR in Asia, a region not renowned for CSR performance. This study also provides evidence for the curtailing role of compensation and governance factors in the negative relationship between CEO greed and CSR.

Executive Compensation Complexity and Firm Performance

How does the complexity of executive compensation contracts affect firm performance? With unknown consequences, the compensation complexity of executives has been rising. We define and measure executive compensation complexity and relate it to accounting, market, and ESG (i.e., environmental, social, and governance) metrics of firm performance. CEO compensation complexity negatively affects all three types of firm performance. We explore theoretical explanations for this relationship and find that cognitively complex CEOs can better deal with complex contracts. The negative complexity effects disappear if firms use only financial goals. Complexity is more harmful in unstable and munificent industries. Complexity also mitigates the negative effect of CEO tenure on long-term performance. In addition, firm performance suffers if the top management team members have heterogeneously complex contracts. Robustness checks support these findings. We conclude that the trend of adding more metrics to executive compensation contracts is not a generally preferable solution to the new and more intense agency problems that firms encounter.

Impact of Balanced Scorecard implementation on company performance of PRC listed companies in the healthcare industry

The Balanced Scorecard (BSC) is a performance measurement management control tool model that can play a critical role in driving companies to achieve sustainable performance in the healthcare industry. In the previous studies, BSC advocates that the sustainable growth of business relies on a management balance focused on financial and non-financial aspects. This study uses the BSC model to examine the core business strategies, namely the duration of CEO tenure, the spending patterns between marketing and Research & Development (R&D) and human resources capability expressed in employee size in the healthcare industry in China. The research used a sample of 305 public-listed healthcare companies in PRC China with data collected for 2016–2019 from the China Stock Market & Accounting Research Database (CSMARD). The data was analyzed by SmartPLS version 3.3.6. This study has three essential findings. First, R&D investment has a negative quadratic impact on marketing expenses. Second, marketing expenses are a mediator between R&D investment and company performance. The last finding is that CEO tenure has a moderating effect on employee size in the company. These findings add to the literature on mediation studies in leadership and management. This study provides insights into mapping BSC as an international management assessment tool, indicating potential research opportunities and highlighting managerial implications.

Board Governance Mechanisms and Capital Structure of Saudi Non-Financial Listed Firms: A Dynamic Panel Analysis

The dynamic trade-off model emphasizes that random shocks and other constraints may force firms to deviate from their optimum debt ratio. In addition, firms must incur adjustment costs for them to revert to their target level due to market frictions. However, prior literature in Saudi does not consider the effect of adjustment costs in determining how board governance mechanisms influence capital structure. By exploiting the generalized method of moments framework (GMM), this study analyzed the balanced panel of 100 Saudi non-financial listed firms covering the period from 2010 to 2019. The research found that Saudi firms observed a dynamic adjustment to attain their target leverage at 30.46% annually. Besides that, findings from the present study equally indicate strongly that board size and CEO tenure are negatively associated with leverage. There is also strong evidence that Saudi firms with a substantial number of independent directors pursue a more levered capital structure. Gender diversity appears insignificant in predicting the firms’ target debt ratio. Consequently, the Saudi board of directors and firms’ managers should consider the adjustment costs and other market frictions when designing the optimum debt-equity ratio.

CEO Narcissism and CSR Decoupling: Evidence from Pakistan

This study aims to identify the relationship between CEO narcissism on CSR decoupling with the moderating role of institutional ownership. For data, the collection probability sampling technique has been used. Data from 183 non-financial firms registered at the Pakistan Stock exchange has been collected for the duration of 2013-2019. Correlation and panel data regression analysis has been used for data analysis. The findings of the current study suggest that there is a positive link between CEO narcissism and CSR decoupling. Moreover, institutional ownership negatively moderates the relationship between CEO narcissism and CSR decoupling. In the present research, CEO duality and CEO tenure have been used as proxies to evaluate CEO Narcissism for the first time. Moreover, Institutional ownership has also not been studied as a moderator between CEO Narcissism and CSR Decoupling before. The outcomes of this study are important for stakeholders as CEO narcissism can affect the CSR practices of the firm, and the market performance of the firm can also be affected. It is also important for top management to work on personality traits that are undesirable for themselves, company performance, and other stakeholders in general.

Do CEO Attributes Spur Conservatism?

This study examines the relationship between chief executive officers’ (CEOs’) characteristics (e.g., tenure, experience, education, age and compensation) and accounting conservatism for a sample of 672 yearly observations from both Jordanian industrial and service companies listed on the Amman Stock Exchange (ASE) during the period 2014–2021. Using feasible generalised least squares, the results show that CEOs with more experience and skills are positively and significantly related to accounting conservatism. Furthermore, consistent with upper-echelon-theory arguments, the findings reveal that CEO tenure is significantly and positively associated with the level of accounting conservatism. The results indicate that CEOs’ education, age and compensation are positively but insignificantly related to accounting conservatism. Overall, this study contributes to the literature by providing evidence of the importance of recognising the effects of CEOs’ characteristics on influencing accounting conservatism in Jordanian industrial and service companies.

Special Treatment to Bank CEOs in Indonesia

The bank still plays the main role as a funding source in Indonesia. Because of that, they are securing the bank's position and showing its best performance become very important. A Special treatment for bank CEOs is one way. This study wants to answer the question of whether that way is sufficient. The special treatment is the CEO compensation, in the form of CEO salary as the main variable and CEO tenure and insider holding as the control variables. Other control variables are financial ratios: debt-to-equity ratio, lesser prudence, and loan-to-deposit ratio. All variables are associated with bank performance consisting of four variables: net interest margin, return on assets, return on equity, and cash flow to assets. By operating the OLS (ordinary least square), this research shows that CEO compensation in the form of salary has a negative effect on banks’ performance. However, another form of CEO compensation, the insider holding, positively influence on cash flow to assets. These results indicate that salary does not stimulate bank CEOs to do their best, whereas bank CEOs perform well when they also act as insider holders.
 
 Received: 25 August 2022 / Accepted: 16 February 2023 / Published: 5 March 2023

PENGARUH CORPORATE GOVERNANCE, CAPITAL STURCTURE, DAN GENDER DIVERSITY TERHADAP FIRM PERFORMANCE

The success and failure of the company can be influenced based on the firm's performance. Firm Performance can be a measure of the company's level of success in achieving the targeted goals. The purpose of the study was to determine the effect of the board of directors, audit committee, foreign ownership, institutional ownership, board independence, gender diversity, ownership concentration, audit reputation, ceo tenure, and leverage on firm performance in non-financial companies listed on the Indonesia Stock Exchange. The study was conducted on non-financial entities listed on the IDX through www.idx.co.id from 2017 to 2021. The sample results that have been selected contain 1,880 data. The data analysis method in the findings contained in this study uses the SPSS and PLS-SEM applications. The results of the study stated that the board of directors, audit committee, foreign ownership, institutional ownership, board independence, gender diversity, ownership concentration, audit reputation, ceo tenure, and leverage had a significant positive effect on firm performance using tobin's q measurement. However, the ownership concentration variable has no significant effect on firm performance by measuring return on equity.

Firm's Intelligent Manufacturing Strategy and R&D Expenditures

Intelligent manufacturing strategy becomes important and influential as the development trend of advanced manufacturing systems. This study examines the impact of firm's intelligent manufacturing on managers' R&D investment decisions from the perspective of strategic transformation. Moreover, we assess whether this impact is moderated by CEO tenure and government subsidies. Based on a sample of 7,522 firm-year observations in Chinese listed manufacturing firms from 2015-2019, we construct a more detailed measurement of intelligent manufacturing strategy by conducting textual analysis of Management Discussion and Analysis (MD&A) report to obtain the information of firms' implementing intelligent manufacturing. Our empirical findings show that firms' intelligent manufacturing strategies are positively related with R&D expenditures after controlling for other firm characteristics that would affect R&D expenditures, consistent with the notion that managers increase R&D investment for the realization of intelligent manufacturing strategy to achieve corporate profitability and their self-worth enhancement. Furthermore, we find that this positive relationship is more pronounced in firms with longer CEO tenure, suggesting that CEOs have a higher investment success rate and solid organizational identity with the increase of their tenure. We also find that government subsidies positively moderate the relationship between intelligent manufacturing strategy and R&D expenditures, which reveals the positive role government subsidies play in alleviating firms' financing constraint and thus helping management have enough funds to invest. The results are robust to a battery of sensitivity tests, including a propensity score matching method, alternative R&D investment measures as well as controlling for other innovation impact. In additional analyses, we find that intelligent manufacturing strategy enhances the level of innovation output by promoting firms' R&D investment, confirming the mediating effect of R&D investment in the relationship between intelligent manufacturing strategy and innovation performance. Overall, our findings are consistent with the view that intelligent manufacturing strategy improves manager's incentives and resulting more investment in innovation. Given that R&D is an activity under the purview of management subject to incentives and is of great interest to firms' long-term benefit and the overall development of society, our findings should be of great interest to management, investors, and regulators.

Risk Management Implementation of Conventional Bank Profitability Using the Ceo's Power as a Moderator Variable During the Covid-19 Pandemic

This study aims to examine the effect of risk management implementation on profitability of conventional commercial banks with CEO tenure as moderator variable during the covid-19 pandemic. This research is included in the hypothesis testing study. All banking companies listed on the Indonesia Stock Exchange (IDX) during the 2020-2021 period are the population in this research. The sampling method was carried out by purposive sampling. F-count obtained the number 128.114 with a probability number of 0,000. This probability number is less than 0.05, so it can be said that the model is fit or appropriate and can be used to estimate profitability; in other words, it can be stated that NPL, NIM, LDR, BOPO, CEOTENURE *NPL, CEOTENURE*NIM, CEOTENURE*LDR, CEOTENURE*BOPO together -same effect simultaneously on profitability (ROA). NPL has a positive effect and its value is not significant to the ROA of conventional commercial banks. NIM has a positive influence and a significant value on the ROA of conventional commercial banks. LDR has a negative and insignificant effect on the ROA of conventional commercial banks. BOPO has a negative and significant impact on conventional commercial bank ROA. CEO Tenure cannot moderator the effect of NPL on the ROA of conventional commercial banks. CEO Tenure can moderator NIM's influence on conventional commercial banks' ROA. CEO Tenure cannot moderator LDR's effect on conventional commercial banks' ROA. CEO Tenure can moderator the influence of BOPO on the ROA of conventional commercial banks.

Generalist CEOs, management risk and internal control weaknesses

AbstractThis study examines the relationship between CEOs’ general ability and the quality of internal control over financial reporting (ICFR). Using a sample of S&P 1500 firms in the United States from 2004 to 2015, I find that firms with generalist (specialist) CEOs are more (less) likely to report internal control weaknesses under Section 404 of Sarbanes‐Oxley Act of 2002 (ICW404). The positive relationship between generalist CEOs and ICW404 is weaker when the management risk is lower (longer CEO tenure). These results are robust to alternative models and approaches to address potential endogeneity issues. Additional analyses suggest that this positive relationship is attributed to generalist CEOs’ excessive risk taking. Furthermore, CEO type is related to company‐wide ICW404, ICW404 due to staffing, complexity and general issues, rather than account‐specific ICW404 or ICW404 due to revenue recognition issues. Drawing from the Upper Echelons Theory, this study contributes to the research on ICFR quality by documenting CEO type as an additional determinant of ICW404. It highlights the importance of investors, auditors and regulators considering the CEO's career experience and operating style when assessing a firm's internal control environment. It also adds to the literature on general managerial ability by documenting the cost of hiring generalist CEOs regarding ICFR quality.

Disentangling the black box around CEO and financial information-based accounting fraud detection: machine learning-based evidence from publicly listed U.S. firms

AbstractThis study investigates the predictive power of CEO characteristics on accounting fraud utilizing a machine learning approach. Grounded in upper echelons theory, we show the predictive value of widely neglected CEO characteristics for machine learning-based accounting fraud detection in isolation and as part of a novel combination with raw financial data items. We employ five machine learning models well-established in the accounting fraud literature. Diverging from prior studies, we introduce novel model-agnostic techniques to the accounting fraud literature, opening further the black box around the predictive power of individual accounting fraud predictors. Specifically, we assess CEO predictors concerning their feature importance, functional association, marginal predictive power, and feature interactions. We find the isolated CEO and combined CEO and financial data models to outperform a no-skill benchmark and isolated approaches by large margins. Nonlinear models such as Random Forest and Extreme Gradient Boosting predominantly outperform linear ones, suggesting a more complex relationship between CEO characteristics, financial data, and accounting fraud. Further, we find CEO Network Size and CEO Age to contribute second and third strongest towards the best model’s predictive power, closely followed by CEO Duality. Our results indicate U-shaped, L-shaped, and weak L-shaped associations for CEO Age, CEO Network Size, CEO Tenure, and accounting fraud, consistent with our superior nonlinear models. Lastly, our empirical evidence suggests that older CEOs who are not simultaneously serving as chairman and CEOs with an extensive network and high inventory are more likely to be associated with accounting fraud.

An Analysis Of Factors Affecting The Financial Distress: The Case Of SOEs In Indonesia

The results of company performance can be determined by one of the internal factors of the company, namely the characteristics possessed by the CEO. Echelon theory explains that vision and strategy choices can be influenced by CEO experience and personality which ultimately affect company performance. The motivation for this study is that in Indonesia it is still rare to use a combination of CEO characteristics variables and financial indicators as factors that can affect financial distress in companies. The aim of this study is to examine the impact of CEO characteristics and financial indicators on financial distress in state-owned companies in Indonesia. This study uses state-owned enterprises (SOEs) listed on the Indonesia Stock Exchange as the research population. The research data was tested using Logistic Regression Analysis. The research findings show that CEO age and sales growth have a significant effect on financial distress. While CEO tenure, CEO educational background, and total liabilities to total assets have no significant effect on financial distress.

Do CEO characteristics matter for corporate risk taking? Evidence from Russia

PurposeThis paper aims to study the impact of CEOs’ personality and social connections on corporate risk-taking in the Russian market.Design/methodology/approachUsing a sample of 93 large listed Russian corporations between 2008 and 2016, this study tests a range of personal traits, including the classical personal characteristics like age and tenure, some country-specific traits such as connections and military experience, as well as other human and social capital characteristics.FindingsThis study finds non-linear relationships between corporate risk-taking and CEO age and tenure. This study also finds that firms run by CEOs with military experience take more corporate risk. On the CEOs’ social capital side, this study’s results suggest that both political and educational connections are positively related to corporate risk-taking.Originality/valueThis study also tests some traits that have usually been ignored by the literature, such as marital and family status.

Masa Jabatan CEO, Keragaman Dewan Direktur, dan Pengungkapan CSR: Eksplorasi Studi Kepustakaan

Purpose: This study reviews various literatures and obtains an overview of the relationship between a CEO's Tenure and Boards Diversity and the quality of Corporate Social Responsibility (CSR) disclosures.Method: The research method used in this study is a qualitative method, namely library research, by utilizing information sources derived from reputable online journals such as Scopus and Google Scholar as well as additional information obtained from articles, books, laws, and other documents relevant to the topic study.Results: The results of studies from various sources show that the quality of CSR disclosure is strongly influenced by the tenure of the CEO and also the diversity of the board of directors. Short CEO tenure tends to increase the quality of CSR disclosure. This is because the tenure is short, the CEO will try to optimize his tenure in order to increase the credibility and ability of the CEO to lead a company. On the other hand, a working tenure that is too long can reduce the quality of CSR report disclosure. The diversity of management also has strong implications for improving the quality of CSR report disclosure. The diversity of administrators can motivate the emergence of creative and innovative ideas to disclose better CSR reports.Implications: This research can be used as material for consideration for companies in making decisions in determining the tenure of the CEO and the diversity of the board.Novelty: This study is the first study attempt by doing research qualitative with considering many previous studies to make some conclusions and contribute to extant literature related to the corporate mechanism by doing library research.

How do CEOs make investment decisions in their early years of tenure? Evidence from investment efficiency

AbstractCareer concerns are escalated during the early years of a CEO's tenure as the market is uncertain about the new CEO's ability. This study examines whether such increased career concerns induce investment inefficiency during the early years of a CEO's tenure in US firms. I find that underinvestment happens in the early years and that the underinvestment problem is most evident when the new CEO is externally appointed and has the low managerial ability. Additional analyses show that the underinvestment problems are more pronounced when firms have a high level of information asymmetry and low financial reporting quality.