Executive Officer Research Articles

Does CEO power affect the risk profile of acquiring insurance company?

Purpose This study aims to examine, on the one hand, the effect of mergers and acquisitions (M&A) on the evolution of the risk profile of insurance companies and, on the other hand, determine the impact of chief executive officer (CEO) power as well as its determinants on the evolution of the risk profile of the acquiring insurance company. Design/methodology/approach The analysis is based on 131 transactions between 2010 and 2022 involving European Union-based acquirers. To assess the impact of M&A on the acquiring insurance company’s risk profile (RP), the authors compare changes in the acquirer’s RP to control insurance companies. This study uses linear regression with two-stage least squares instrumental variables to examine the effect of CEO power on changes in merger-related risk. Findings The results indicate that M&A significantly increase the RP of the acquiring insurance company. Furthermore, CEO power, as measured by its four proxies (structural, ownership, experience and prestige), is positively correlated with an increase in the RP of the acquiring insurance company. These findings suggest that powerful CEOs tend to take on more risk during M&A transactions in the insurance sector. Practical implications The study’s findings can inform managerial decision-making around mergers and executive incentives. Regulators can use the insights to develop early warning systems and policies to promote financial stability. Insurance firms can enhance their own risk management by assessing the potential M&A impact and designing robust risk governance frameworks. Investors can better evaluate the risk implications of M&A and CEO influence when assessing insurance companies. Originality/value To the best of the author’s knowledge, this study is the first empirical investigation to introduce diverse executive power metrics to analyze the link between executive power and risk-taking in the European insurance sector, with a specific emphasis on the impact on M&A as critical investment choices.

CEO narcissism and financial performance: the role of corporate social responsibility

PurposeThis study investigates the intricate relationship between chief executive officer (CEO) narcissism, corporate social responsibility (CSR) and financial performance, focusing on the Indonesian business context. Leveraging upper-echelons theory, the research posits that CEO narcissism significantly predicts both CSR initiatives and firms' financial performance. Additionally, it explores CSR as a potential mediator in the link between CEO narcissism and financial performance, with particular focus on the CEO’s involvement in recommending CSR activities.Design/methodology/approachA sample of 644 observations was analyzed, revealing that narcissistic CEOs tend to lead firms with higher CSR engagement, which in turn is positively related to financial performance as measured by Tobin’s Q.FindingsRegression models indicate that while CEO narcissism directly related to firm performance, the inclusion of CSR as a variable significantly strengthens this relationship. The indirect association analysis further confirms that CSR mediates the relationship between CEO narcissism on firm performance.Originality/valueThese findings contribute to the literature by elucidating the dual relationship of CEO narcissism on organizational outcomes and by highlighting the role of CSR in enhancing financial performance. This study also underscores the importance of considering cultural and institutional contexts in understanding the dynamics between executive personality traits and corporate strategies.

From bad to worse: Follower reactions to escalating unethical behaviors of leaders

Abstract The present study focuses on the Charismatic, Ideological, and Pragmatic Theory of leadership, examining how sensemaking mitigates follower reactions after unethical leader behavior. We examine the impact of ethical misconduct type on follower outcomes, specifically whether CIP leaders are able to justify unethical behavior to maintain follower attitudes toward the leader. Participants assumed the role of an employee for a fictional oil and gas exploration company, encountering the company’s C, I, or P chief executive officer (CEO) through a video-taped speech discussing the state and vision of the organization. Participants read ethical misconduct related to “people” or ethical misconduct related to “tasks or resources” by the organization’s CEO. Finally, participants were provided (or not provided) a video-taped justification of the ethical misconduct. A three-way interaction revealed the impact of ethical misconduct type is key to leader sensemaking. Implications are discussed.

Family involvement in board of directors and market valuation: evidence from Egyptian listed firms

PurposeThis study aimed to investigate how family involvement in management (FIM) affects market valuation and whether this effect is influenced by the presence of founder chief executive officers (CEOs) and the dual role of their CEO positions.Design/methodology/approachTobin’s Q ratio measured market valuation, while FIM was measured by the ratio of family managers to the total number of board of directors (BOD) seats. Additionally, the appointment of founders to CEO positions and the dual role of their CEO positions were used as moderators. As a panel data technique, the dynamic generalized method of moments (GMM) estimator was employed for a sample of 85 Egyptian-listed firms from 2011 to 2018.FindingsThe findings revealed that FIM negatively affects market valuation; hence, the more family managers serving on the BOD, the lower the firm’s market value. Moreover, the findings showed that the impact of FIM on market valuation is mitigated by the presence of founder CEOs and the dual role of their CEO positions.Originality/valueThis study highlights the negative repercussions of FIM on firm value and the urgency of professionalizing the family business through an independent BOD and ensuring more effective monitoring systems.

Impact of digital business transformation on organizational ambidexterity and performance in indonesian insurance firms

Purpose: This study investigates the impact of digital business intensity and transformation on organizational ambidexterity and sustainable performance on insurance companies in Indonesia from a dynamic capabilities’ perspective.Design/methodology/approach: The study uses a quantitative approach, purposive sampling used to select insurance companies with assets over IDR 1 trillion. The primary data was obtained directly from the top-level management unit of 120 data questionnaires, namely, 40 Chief Executive Officer (CEO), 40 chief agency officer (CAO) and 40 Chiefs Technology Officer CTO) of each company. The data of each department in a company is aggregated as a single unit of responses from one company. The Structural Equation Model is used as a method to test and analyze data, using SmartPLS software.Purpose: This study aims to investigate the impact of digital business intensity and digital transformation on organizational ambidexterity and sustainable organizational performance in Indonesian insurance firms from a dynamic capability perspective.Design/methodology/approach: Through quantitative approach, purposive sampling is used to select insurance companies with assets exceeding IDR 1 trillion. Primary data was collected through structured questionnaires distributed to 120 top-level executives, including 40 Chief Executive Officers (CEOs), 40 Chief Agency Officers (CAOs), and 40 Chiefs Technology Officers CTOs). Responses from each company were aggregated to form a unified dataset for analysis. Structural Equation Modeling (SEM) was used to analyze the data using SmartPLS software.Findings: The findings reveal that both digital business transformation and government interventions significantly increase organizational ambidexterity. Furthermore, organizational ambidexterity serves as a mediator for the relationship between digital business intensity and government intervention towards sustainable organizational performance. The mediating role of organizational ambidexterity in the relationship for digital business intensity and sustainable organizational performance is positively moderated by digital business intensity.Research limitations/implications: The study applies dynamic capability as a theoretical basis to understand how insurance companies can attain sustainable performance in the digital age. However, it acknowledges limitations, such as the exclusion of external factors like macroeconomic conditions, regulatory changes, and rapid technological advancements. The focus on the insurance sector may also limit the applicability of the findings to other industries with different dynamics.Practical implications: The study provides actionable insights for insurance firms to refine their digital strategies. By developing and validating new metrics to measure digital business intensity and sustainable performance, firms can better assess the effectiveness of their digital transformation. This framework serves as a guide for practitioners to evaluate the impact of digital initiatives on their organizations.Originality/value: This study enriches the organizational literature by demonstrating how digital business intensity and ambidexterity contribute to enhancing sustainable performance in the insurance industry. It also highlights the significance of government policies as external factors influencing organizational dynamics, offering a new perspective on how these elements interact within the context of dynamic capabilities in the financial sector.

The Influence of the Background and Characteristics of the Chief Executive Officer on Company Performance

This study aims to analyze the influence of CEO background and characteristics on company performance. Purposive sampling is the method of sampling that is employed, using information gathered from 83 financial firms that were listed between 2020 and 2022 on the Indonesia Stock Exchange. According to data analysis using multiple regression, the background characteristics of the CEO including gender, tenure, education, and experience significantly improve the performance of the business. As for CEO characteristics, duality, citizenship, stock ownership, and turnover also significantly improve business performance. These results demonstrate that according to agency theory, CEO characteristics, and background are crucial in reducing agency conflicts and enhancing company performance. CEOs with sufficient educational background, experience, and tenure are typically more successful in reaching judgments that are in line with the objectives of shareholders. Characteristics such as duality, citizenship, and stock ownership by the CEO provide greater motivation to enhance company value, while strategic turnover can bring the necessary innovation and change.

Chief executive officer political connection and firm performance: Evidence from Nigerian listed deposit money banks

Purpose: Extant studies have investigated the determinants of firm performance; however, limited studies have focused on CEOs' political connections, especially in Nigeria, despite the postulation that the invisible hand of politics controls the economic sector. Our study fills the gap in the literature by examining the effect of the CEO's political connection on the financial performance of the Nigerian Deposit Money Banks. Design/ Approach/Methodology: The scope of this study is limited to the listed Nigerian Deposit Money Banks (DMBs) within the period 2011-2023. We employed a longitudinal research design by collecting 156 firm-year observations resulting from 12 listed DMBs and estimated using the ordinary least square method. Findings: Our study shows that CEO political connection is positive and significantly related to firm performance, supporting the assertion that CEO political connection improves the firm's financial performance, which aligns with the resource dependence theory. Conclusion: the study concluded banks CEO with political connection have a higher performance. Research Limitations/Implications: The study is limited to the Deposit Money Banks (DMBs); hence, we recommend that future studies focus on other sectors of the Nigerian economy. Our study contributed to limited empirical evidence on political connection and firm performance and shows that the CEO's political connection revolves around resource dependence and networking theories.

The impact of strategic agility on the strategic orientation during the Covid-19 crisis in Jordanian medical and pharmaceutical industries companies

Purpose This study aims to explore the impact of strategic agility on strategic orientation and its dimensions (retrenchment, perseverance, innovation and exit strategies) in Jordanian medical and pharmaceutical industries companies during the COVID-19 crisis. Design/methodology/approach The researchers relied on a descriptive-analytic methodology. The study population consisted of 23 companies in the medical and pharmaceutical industries in Amman, Jordan. The sampling units were the top managers of these companies, represented by chief executive officers and main department managers. The sample size was 193. Questionnaires were distributed to collect the data, while the valid for analysis were 165 questionnaires. Findings The results showed that strategic agility has a positive effect on strategic orientation, as well as on, perseverance, and innovation strategies, but it has an opposite effect on retrenchment strategy. However, it has no statistically significant effect on the exit strategy. Originality/value This pioneering study is uniquely valuable through filling a gap in the literature by examining the dynamic relationship between strategic agility and strategic orientation, offering practical insights for decision-makers to enhance resilience that contributes to overcoming the COVID-19 and future crises.

The Importance of Luck in Executive Promotion Tournaments: Theory and Evidence

ABSTRACTWe empirically test whether executives’ increases in base salary when promoted to Chief Executive Officer (CEO) result from the wage bids of competing firms (i.e., “market‐based tournaments”) or from the strategic choices of the firm's board of directors to elicit optimal executive incentives (i.e., “classic tournaments”). Our test emphasizes the effect of the “importance of luck” (i.e., the variance of luck) on the pay raises that accompany promotion. Specifically, we focus on how that effect differs between the two types of tournaments. An estimated negative relationship between the importance of luck and the executive salary spread supports market‐based tournaments, whereas a positive relationship supports classic tournaments. The results are non‐monotonic in firm size. Executive tournaments in both the bottom 13% of firms (i.e., total assets below $376 million) and the top 2.5% of firms (i.e., total assets above $112 billion) are more consistent with classic tournaments, whereas the nearly 85% in the middle of the distribution of firm size are more consistent with market‐based tournaments. Also, controlling for firm size, highly concentrated product markets are more consistent with market‐based tournaments. Extending market‐based tournament theory to allow executives to choose the luck variance reveals that executives infuse their tournaments with a high luck variance, which lowers the expected pay differential and depresses incentives.

Exploring the Human Face of Engaged Environmental Strategies: The Role of Chief Executive Officer and Human Capital in Peruvian Firms

ABSTRACTIn emerging economies characterized by the absence of strong national regulatory institutional forces, the role of private initiative through companies and entrepreneurs is highly relevant and has a prominent role in addressing environmental problems. This work aims to improve the understanding of the role of two key human‐based organizational factors, such as CEO environmental commitment and green human capital (GHC), on the effective implementation of corporate environmental strategies seeking to integrate and engage market and non‐market stakeholders. Our empirical research was carried out in a sample of 86 Peruvian firms operating in different industries through in‐depth interviews and questionnaires. Our results show the importance of CEO environmental commitment on the implementation of engaged environmental strategies, as well as the mediating and essential role of GHC in this relationship. We contribute to the literature debate by providing theory and empirical insights on the drivers of corporate environmentalism in developing countries, highlighting the importance of the human‐based internal organizational factors as driving forces of corporate environmentalism.

CEO Gender and ESG Controversies

This study examines the impact of chief executive officer (CEO) gender on environmental, social and governance (ESG) controversies among publicly listed non‐financial firms in the USA from 2018 to 2023. The results show that firms led by female CEOs experience significantly fewer ESG controversies. In addition, the findings reveal that the mitigating impact of female CEOs on ESG controversies is more pronounced in firms with a critical mass of women directors and a female voice in corporate boards, creating an optimal environment for ethical and socially responsible practices, thereby reducing ESG controversies.

Understanding the role of gender diversity in ESG misconduct. The moderating effect of gender equality policies

Purpose This paper aims to investigate whether gender-diverse boards and top management teams (TMTs) reduce undesirable environmental social governance (ESG) behavior and whether a critical mass of women in leadership is necessary to influence this outcome. In addition, the authors study whether differences in the levels of national commitment to gender-equality policies affect the effectiveness of gender-diverse boards and management in curbing ESG misconduct. Design/methodology/approach This study examines the role of women directors and women executives in ESG misconduct using a European sample of analysis of 2,994 firm-year observations from 2015 to 2020. Findings The authors find that gender diversity effectively prevents ESG misconduct only in countries with strong national policies supporting gender equality. Specifically, women directors and executives significantly reduce ESG misconduct in these countries, demonstrating the complementary role of gender diversity and national equality policies. In addition, female chief executive officers are more likely to curb negative ESG practices in firms operating within gender-equal corporate environments, noting that female chief executive officers are not effective in reducing irresponsible ESG behavior when they are not supported by a critical mass of women directors or executives. Practical implications This paper finds novel evidence that the influence of female representation on ESG misconduct is not linear but conditional on the level of female proportion; women in the minority (usually under 3) can scarcely influence group decisions because their specific female attributes are only evident when the visibility and legitimacy of the female group are high enough. Firms led by female chief executive officers seem to reduce ESG misconduct, especially when their chief suites are above a critical threshold. But queen bee female chief executive officers are not effective in reducing adverse ESG activity if their boards and TMTs are not gender diverse; the joint effect of women in different hierarchical positions contributes to decreasing ESG failures. Social implications These findings are useful for policymakers because they show that although there is growing social concern about business gender equality and increasing regulatory efforts through soft/hard gender quotas, stakeholders will not completely benefit from firm gender diversity without national support for gender equality. Originality/value This study contributes to the sustainable development literature by examining the direct effects of gender diversity at multiple levels of a firm’s hierarchy (chief suite, board, TMTs), as well as addressing the gap between firm gender diversity and national gender equality policies as mechanisms to reduce ESG misconduct. It also explores the queen bee phenomenon, noting that female leaders in non-diverse organizations often adapt their leadership style to align with masculine corporate cultures.

Green reporting and firm performance of listed manufacturing firms in Sub-Saharan Africa (SSA): Does chief executive officer (CEO) cultural origin matter?

Green reporting and firm performance of listed manufacturing firms in Sub-Saharan Africa (SSA): Does chief executive officer (CEO) cultural origin matter?

Nonfamily executives in family firms and dividend payout: evidence from Pakistan

Purpose The strategic behavior of family firms is not the same when the top management positions are occupied by nonfamily executives. This study aims to examine the dividend payout behavior of family firms in the presence of nonfamily chairperson and nonfamily chief executive officer (CEO). Design/methodology/approach The authors used 2,926 firm-year observations of nonfinancial firms listed on Pakistan Stock Exchange over the period 2012–2021. To test the hypotheses, the authors used a generalized method of moments estimation and further applied ordinary least squares regression and fixed effects analysis to check for the robustness of results. Findings Using the lens of social identity theory, the authors found that for the sake of a firm’s reputation and to increase the wealth of family, the family firms are associated with higher dividend payout. However, the presence of nonfamily chairperson and nonfamily CEO weakens this positive relationship due to higher information asymmetry leading to lower dividend payout in such firms. Originality/value The study adds to the family business literature by highlighting the dividend payout behavior of family firms and providing empirical evidence of distinct behavior of family firms in presence of nonfamily chairperson and nonfamily CEO in context of an emerging economy.

Co-opted boards and bidder performance

PurposeDefining co-opted directors as those who join a company’s board after an incumbent chief executive officer assumes office, this study aims to investigate the influence of co-opted boards on bidder performance.Design/methodology/approachThis study applies ordinary least squares regression analyses to a sample of 8,939 acquisition observations announced by US firms spanning the 1999–2019 period. Event study methodology was employed to capture the market response to acquisition announcements. Propensity score matching technique, a two-stage least squares instrumental variable approach and model selection through the Lasso method were performed for robustness and endogeneity correction purposes.FindingsThe results depict a significant negative relationship between a co-opted board and return to acquirers, suggesting that managers under co-opted boards make value-destructing Mergers and Acquisitions deals. We also show that the relationship between board co-option and acquisition performance is positively moderated by institutional ownership while being negatively moderated by an entrenched board. Our additional tests reveal that board co-option reduces acquisition efficiency and leads to worse financial performance.Practical implicationsThis study offers important implications for regulators and policymakers by highlighting how poor monitoring of the board of directors can influence announcement returns.Originality/valueTo the best of the authors’ knowledge, this paper appears to be the first investigation that makes a link between board co-option and various dimensions of acquisition decision.

Millennial executives: effects of the age-inverse relationship in CEO–top management team on corporate misconduct in China’s construction industry

PurposeThis study examines whether and how the age-inverse relationship between the chief executive officer (CEO) and the top management team (TMT) affects corporate misconduct in China’s construction industry. Drawing on social identity theory, we propose that the age-inverse relationship in CEO–TMT may diminish their social identity and further decrease the likelihood of corporate misconduct in construction firms.Design/methodology/approachUsing a longitudinal dataset of firms in China’s construction industry covering the years 2003 through 2021, this study adopted a logit regression model with fixed effects.FindingsThe results show that the age-inverse relationship in CEO–TMT is negatively related to corporate misconduct. Further investigations suggest that performance feedback moderates the relationship between the age-inverse relationship in CEO–TMT and corporate misconduct. Firms with an age-inverse relationship between CEOs and TMTs are more likely to engage in fraudulent behavior when performance is above aspirations and less likely to commit fraud when performance is below aspirations.Research limitations/implicationsThe sample of this study is limited to China’s construction firms. Drawing on social identity theory, this study explores the relationship between the age-inverse relationship and corporate misconduct in China’s construction industry, which enriches the antecedents of corporate misconduct and contributes to CEO–TMT interface research within construction firms.Practical implicationsThis study provides a guideline for construction firms on how to regulate and reduce misconduct. It will offer insights into human resource arrangements within the management of construction firms in an aging context.Originality/valueConsidering that few studies explore fraudulent behavior of construction companies at the upper echelon level, this study focuses on a novel and new antecedent (i.e. age-inverse relationship in CEO–TMT) and its boundary conditions. The findings extend the research on corporate misconduct and strategic leadership in the construction industry.

Funding rules that promote equity in climate adaptation outcomes

Many climate policies adopt improving equity as a key objective. A key challenge is that policies often conceive of equity in terms of individuals but introduce strategies that focus on spatially coarse administrative areas. For example, the Justice40 Initiative in the United States requires 518 diverse federal programs to prioritize funds for "disadvantaged" census tracts. This strategy is largely untested and contrasts with the federal government's definition of equity as the "consistent and systematic fair, just and impartial treatment of all individuals (Executive Office of the President, Federal Register, 2021)." How well does the Justice40 approach improve equity in climate adaptation outcomes across individuals? We analyze this question using a case study of a municipality that faces repetitive flooding and struggles to effectively manage these risks due to limited resources and public investment. We find that the way the Federal Emergency Management Agency implements the Justice40 Initiative can be an obstacle to promoting equity in household flood-risk outcomes. For example, in this case study, ensuring the majority of benefits accrue in "Justice40 Communities" does not reduce risk for the most burdened households, does not reduce risk-burden inequality, and produces net costs. In contrast, we design simple funding rules based on household risk burden that cost-effectively target the most burdened households, reduce risk-burden inequality, and accrue large net benefits. Our findings suggest that "disadvantaged community" indicators defined at coarse spatial scales face the risk of poorly capturing many climate risks and can be ineffective for meeting equity promises about climate-related investments.

Uneasy lies the head that wears a crown: How celebrity CEOs affect corporate social responsibility-An empirical study of Chinese listed firms.

This study examines the influence of celebrity Chief Executive Officers (CEOs) on corporate social responsibility (CSR) in Chinese listed firms in the A-share market from 2009 to 2020. We employ a multi-theoretical approach, drawing on upper echelons, impression management, and identity theories to explore several aspects of this topic. We find that celebrity CEOs are associated with better CSR engagement, suggesting that celebrity CEOs are likely to utilize CSR to strategically manage their impressions. We then explore four boundary conditions in the relationship between celebrity CEOs and CSR, and how celebrity identity mechanisms moderate this relationship. We find that CEOs' age, gender, and degree of media attention can strengthen the celebrity CEOs-CSR relationship, explaining the boundary conditions influencing the level of celebrity CEOs' impression management motivation. Additionally, environmental dynamism does not influence the association between celebrity CEOs and CSR performance. Our study provides new insights into the understanding of CSR antecedents, particularly from the perspective of CEOs' psychological motivation, and contributes to formulating future CEO and CSR strategies.

Too good or not by hiring insider CEO: an analysis preference of investment efficiency from Indonesia

Purpose The term “Insider CEO” refers to actor in the top management at corporate level who has the advantage of having better information regarding a company’s resources to make investment decisions. This study aims to examine the relationship between insider chief executive officers (CEOs) and investment efficiency in emerging economies. Design/methodology/approach The authors comprises sample of nonfinancial companies listed on the Indonesia Stock Exchange during the period of 2011–2021, using an archival approach through regression analysis. Findings This study demonstrates a significant negative relationship between insider CEOs and investment efficiency. In addition, audit quality as the firm audited by BIG4 accounting firm changes the direction of previously negative findings, turning them into significant positive relationships, and audit quality acts as a moderating factor on the insider CEOs and investment efficiency nexus. Furthermore, the authors conducted a series of endogeneity and robustness tests to strengthen the results of this study. Research limitations/implications This study offers new ideas in the investment literature and its practice in companies, where it highlights the role of the existence of an insider CEO in practice on investment efficiency. The authors provide recommendations to companies, potential investors and policymakers regarding the potential for insider CEOs to influence investment returns that tend to be less efficient. Therefore, this study proves that the presence of an insider CEO has a higher risk-taking preference, which has the potential to influence less efficient investment practices. Originality/value Several previous studies have focused more on the role of CEOs who come from outside the company and their impact on investment practices. However, it is not clear whether insider CEOs will influence the company’s investment efficiency practices driven by the perspective of “risk preferences and investment returns”. To the best of the authors’ knowledge, this is the first study to substantiate the role of CEOs based on their origin and their impact on less efficient investment practices.

The Role of Medicinal Plants in Healing Coronavirus Pandemic in Songwe Region, Tanzania

This research qualitatively explored the role of medicinal herbal plants in healing COVID-19 in Tanzania, focusing on the Songwe Region as a case study. Study participants included traditional leaders, elders, traditional healers, medical doctors, ward executive officers, village executive officers, and social community workers. Data were collected through in-depth interviews, focus group discussions and documentary reviews. Furthermore, content analysis was utilised as a tool for analysing the data. The study reveals that certain medicinal plants— like cluster fig (mkuyu in Swahili), oleifera (mlonge in Swahili), chibhangalume roots in Kinyiha, and Chindali, Luvumbe leaves in Kinyiha and Mguluka roots in Chindali were used to heal symptoms associated with the COVID-19 pandemic, such as coughing, flu, chills, respiratory distress and fatigue. These herbal remedies were primarily employed to address coronavirus-related maladies and promote overall health and wellness. The findings indicated that participants perceived these plants as productive in healing COVID-19, compared to conventional pharmaceuticals. The study suggests integrating medicinal herbal plants into public health to effectively combat the spread of COVID-19 in Tanzania.