General Managerial Skills Research Articles

How do CEOs' general managerial skills affect firms' digital transformation? The contingent roles of performance feedback and financial slack

PurposeExecutives play a key role in firms’ digital transformation, but extant literature remains unclear about the role of the CEO’s general managerial skills. This study aims to investigate the impact of CEOs' general managerial skills on firms’ digital transformation.Design/methodology/approachDrawing on upper echelons theory and the behavioral theory of the firm (BTOF), this study integrates insights from the CEO’s general managerial skills, i.e. a form of decision-makers’ cognitive bias, and its interactions with different types of behavioral heuristics including performance feedback and financial slack in the strategic decision of firms’ digital transformation. Employing a panel dataset of China’s A-share listed firms from 2007 to 2023, we conduct empirical research by using standard two-way fixed effects regressions.FindingsWe find that CEOs’ general managerial skills have a positive impact on firms’ digital transformation, in which there are three mechanisms including digital cognition, risk-taking and coordination mechanisms. Furthermore, we offer a contingent framework based on the perspective of BTOF. We find that performance shortfalls strengthen the positive impact of CEOs’ general managerial skills on firms’ digital transformation, while performance surplus and financial slack weaken this impact.Originality/valueThis study expands the literature on the driver of firms’ digital transformation by investigating the impact of CEOs’ general managerial skills on firms’ digital transformation and helps to understand firms’ digital transformation decisions more comprehensively from the perspective of CEOs’ previous experience. We offer new insight into digital transformation by emphasizing the interaction impacts of the CEO’s general managerial skills and firms’ performance feedback and financial slack.

Do venture capital-driven top management changes enhance corporate innovation in private firms?

Do venture capital-driven top management changes enhance corporate innovation in private firms?

CEO origin and general managerial skills: A research on firms listed on Borsa Istanbul

CEO origin and general managerial skills: A research on firms listed on Borsa Istanbul

The dark side effects of CEO general managerial skills on corporate overinvestment

The dark side effects of CEO general managerial skills on corporate overinvestment

Do generalist CEOs engage in more tax avoidance than specialist CEOs?

Existing research suggests that generalist CEOs, who possess managerial skills that are transferrable across firms and industries, are more able to bear downside risk than specialist CEOs with non-transferrable managerial expertise. In this paper, we examine whether generalist CEOs are better positioned to engage in risky tax avoidance strategies than specialist CEOs. Our empirical results support this prediction and show that firms with generalist CEOs tend to engage in more tax avoidance than those with specialist CEOs. Our identification strategy includes an instrumental variable method and a difference-in-differences test using CEO turnover as a quasi-natural experiment to correct for endogeneities. A battery of robustness checks and cross-sectional tests strengthens our findings. Taken together, our findings imply that general managerial skills of CEOs matter more for tax planning than do specific managerial skills.

Innovation beyond firm boundaries: Strategic alliances and corporate innovation

Innovation beyond firm boundaries: Strategic alliances and corporate innovation

Remuneration committees, CEO compensation, skills and retention

PurposeThe purpose of this study is threefold: to examine the impact of a remuneration committee (RC) on the level of chief executive officer (CEO) remuneration; whether firms with a RC, pay a premium to CEOs with different skill sets (general or specific); and whether a pay premium mitigates the potential for CEO turnover.Design/methodology/approachThis study uses a sample of 5,305 firm-year observations on a data set drawn from companies listed on the Australian Securities Exchange for the period 2007 to 2014. The authors use ordinary least squares as well as logit regression techniques to test the formulated hypotheses. Difference in difference and propensity score matching techniques were undertaken to address the endogeneity concerns.FindingsThe findings show that firms with a RC pay a higher total remuneration to CEOs compared to firms without a RC. Furthermore, firms with a RC, value and reward CEOs with general skills by paying a premium not offered to CEOs with industry-specific skills. Paying a premium, in turn, mitigates CEO turnover by strengthening the CEO’s commitment to the organisation.Originality/valueThe study helps us to understand the critical role played by the RC in the remuneration of CEOs. The findings show that RCs act as an effective governance mechanism to deal with issues of executive remuneration and to retain skilled CEOs. Additionally, CEOs who acquire and develop general managerial skills will be able to extract higher pay from improved bargaining power. The findings will be of relevance to shareholders, regulators and company management who have an interest in executive pay and performance.

CEO's characteristics and value creation from corporate spin‐offs

AbstractAn important corporate spin‐off procedure is forming the spun‐off unit's management team by a parent firm, especially the selection of the spun‐off unit CEO. Using 207 completed spin‐offs with announcement and execution dates between 1994 and 2018, we investigate whether the financial expertise of spun‐off unit CEOs is an essential determinant of post‐spin‐off performance other than spun‐off unit CEOs’ other observable characteristics, including their general managerial skills. We find that the abnormal announcement returns for appointing financial expert CEOs at spun‐off units are between 2.83 and 3.14 percentage points larger than those generated for appointing non‐financial expert CEOs. Furthermore, spun‐off unit CEOs with financial expertise significantly improve spin‐off firms’ access to external capital resources and subsequent operating performance. Overall, we conclude that spun‐off unit CEOs’ financial expertise is a critical determinant of the value creation of spin‐off procedures. Our paper contributes to a growing literature on CEOs, their characteristics, and their impact on firm performance.

CEOs' general managerial skills and corporate risk taking subject to the moderator of CEO tenure

AbstractIn this study, we examine the relation between chief executive officers' (CEOs') general managerial skills and firms' risk‐taking behaviour. We find that generalist CEOs are associated with significantly higher firm risk, with the association decreasing significantly with CEO tenure. We propose the following managerial skills transformation explanation: the longer a CEO stays with a firm, the less general and more firm specific the CEO's skills and knowledge become; therefore, any effect of the CEO's general managerial skills only appears in the early years of tenure.

General Managerial Skills and Organizational Ambidexterity

Using insights from Upper Echelon Theory and human capital literature, the study establishes a link between the general managerial skills and organizational ambidexterity. I theorize that executives with higher general managerial skills gathered over their life time work experience have an inverted U-shaped relationship with organizational ambidexterity. Using a sample of firms from Drugs and Medical Device industries from 1993-2003, I find the support of the hypothesis. I find that general managerial skills positively moderate the relationship between organizational ambidexterity and firm performance. The results contribute to our understanding of antecedents of organizational ambidexterity as well as to the Upper Echelon Theory.

Does Managerial Human Capital Shape Investment Strategy?

We build a model investigating how managerial human capital affects a firm's optimal choice of external investment vs. internal investment strategy. At the heart of the model is the idea that managers with more general skills have better outside opportunities and hence can command greater compensation from their employer. We show that this greater compensation will optimally take the form of stronger incentives, which in turn lead to higher managerial effort. In this case, it becomes optimal for the firm to engage in activities in which managerial effort is most valuable. To the extent that the success of external investment through acquisitions is more directly dependant on managerial effort than internal investment which is relatively more dependent other internal factors; then we should observe a positive effect of genera skills on firms' tendency to adopt external investment strategy. Moreover, this relationship should be more pronounced the greater the agency concerns and associated strength of incentives. Empirical analysis using U.S. data provides consistent support for the above model predictions. To address endogeneity concerns, we use variation in enforceability of non-compete agreements as an instrument for general managerial skills. The IV regressions suggests a causal and positive impact of general skills on external investment strategy.

Chief Financial Officer Functional Diversity and the Timeliness of Annual Reports: A Comparative Study of Firms With Different Ownership Types.

Functional diversity is related to functional areas in which CFOs are experienced. It reflects their number of general managerial skills or social ties to some extent. In this paper, we try to examine whether there is an association between CFO functional diversity and the timeliness of annual reports. Using data on Chinese listed firms from 2009 to 2017, we found that in state-owned enterprises, there is a negative relationship between this diversity and timeliness. However, the promotion incentive of CFOs with functionally diverse experience can weaken this negative relationship. We also found that there is a positive relationship between the two factors in private enterprises whose offices are headquartered in regions with a low degree of marketization. We use difference-in-differences method to test the hypotheses again. The conclusions remain robust.

How do independent directors view generalist vs. specialist CEOs? Evidence from an exogenous regulatory shock

How do independent directors view generalist vs. specialist CEOs? Evidence from an exogenous regulatory shock

Executive Mobility in the United States, 1920 to 2011

Executive Mobility in the United States, 1920 to 2011

How Do Independent Directors View Generalist vs. Specialist CEOS? Evidence from an Exogenous Regulatory Shock

How Do Independent Directors View Generalist vs. Specialist CEOS? Evidence from an Exogenous Regulatory Shock

General managerial skills and corporate social responsibility

General managerial skills and corporate social responsibility

Rethinking the Career Anchors Inventory framework with insights from a finance transformation field study

Rethinking the Career Anchors Inventory framework with insights from a finance transformation field study

Foreign experience and CEO compensation

Foreign experience and CEO compensation

Do General Managerial Skills Spur Innovation?

We show that firms with chief executive officers (CEOs) who gain general managerial skills over their lifetime of work experience produce more patents. We address the potential endogenous CEO–firm matching bias using firm–CEO fixed effects and variation in the enforceability of noncompete agreements across states and over time during the CEO’s career. Our findings suggest that generalist CEOs spur innovation because they acquire knowledge beyond the firm’s current technological domain, and they have skills that can be applied elsewhere should innovation projects fail. We conclude that an efficient labor market for executives can promote innovation by providing a mechanism of tolerance for failure. The Internet appendix is available at https://doi.org/10.1287/mnsc.2017.2828 . This paper was accepted by Gustavo Manso, finance.

The impact of managerial ability on crisis-period corporate investment

The impact of managerial ability on crisis-period corporate investment