Impact Of Chief Executive Officer Research Articles

CEO duality and corporate social responsibility: A moderation effect of founder CEO

With a panel of 6613 firm-year observations of NSE-listed firms during 2015–2020, we construct a corporate social responsibility (CSR) engagement score based on entropy measures to analyse the impact of chief executive officer (CEO) duality on CSR practices in India. This study shows that CEO duality negatively influences the CSR practices of the firm. We also examine the moderation impact of the founder status of CEO on the relationship between CEO duality and CSR practices and find a positive moderation effect. We have also checked the validity of CEO duality and CSR relationship under high and low external and internal monitoring. The results are in line with agency theory and the Uday Kotak committee and suggest the non-duality structure for strong corporate governance. We also extend the study by analysing the relationship between CEO duality and CSR practices across different business life cycles. The result shows that the duality structure of mature and declining firms negatively influences the CSR practices of the firm compared to introduction, growth, and shakeout firms. This result suggests that CEO duality of mature and declining firms utilize their power to maximise available resources for their personal benefits at the cost of other stakeholders. Further, the findings are robust to applying propensity score matching, two stage least squares, and three stage least squares.

Green finance when stakeholders’ interests collide with each other: the case of Bangladesh

PurposeThis study examines the impact of chief executive officer (CEO) power, institutional investors and their interaction on green financing provided by Bangladeshi financial institutions and the moderating effect of government policy and CEO political connections on these relations.Design/methodology/approachWe employ ordinary least squares (OLS) regressions and interaction terms among variables of interest for the empirical analysis.FindingsGreen financing decreases with CEO power, implying that CEOs of this country’s financial institutions are averse to green loans, whereas institutional investors increase green financing extended by these institutions. The government policy, which includes financial incentives for complying financial institutions, strengthens institutional investors' positive impact on green financing, but it does not change CEOs' aversion to green loans. Institutional investors have a positive moderating effect on the relationship between green finance (GF) and CEO power, but this positive moderating effect is negated in banks where the government owns a stake, possibly because CEOs of state-owned financial institutions are politically connected, which reduces institutional investors’ influence over them.Originality/valueThis study is unique in that it is the first to examine how the interaction among different stakeholders affects green financing in a unique setting. As the literature is almost silent on this topic, the findings of this paper are expected to raise policymakers’ awareness of the obstacles that hamper the efforts of developing countries to go green.

CEOs scientific background and firm innovation: evidence from China

Purpose This study aims to inspect the impact of Chief Executive Officers’ (CEOs) education in a “specific field,” such as CEOs with science and engineering backgrounds on firms’ innovation. Based on agency theory, this study also reports how an endogenous factor, i.e. CEOs’ compensation, and an exogenous factor such as intellectual property rights (IPR), moderate the CEOs with a scientific background (CEOSB)-innovation relationship. Design/methodology/approach This study uses a sample of Chinese nonfinancial firms listed on the Shanghai and Shenzhen Stock Exchanges from 2008 to 2018 by applying the ordinary least squares regression method. To deal with the endogeneity issues, this study also performs a series of additional tests. Findings The results indicate that the effects of CEOSB on the firm innovation activities are positive and significant. Further, this study finds that CEOs’ compensation and IPR protection positively and significantly moderate the CEOSB-innovation relationship. These outcomes are robust to a series of additional tests. Research limitations/implications The results of this study have valuable implications for various stakeholders interested in stimulating innovation. To sum up, the results of this study inculcate these stakeholders that the enhancement of firm innovation is contingent on the appropriate selection of CEOs, effective compensation packages and IPR regulations. Originality/value Distinct from the existent studies, the focus of the study is on the perspectives of CEOs’ scientific backgrounds. Further, based on agency theory, this study also reports how CEOs’ compensation and IPR protection moderate the CEOSB-innovation relationship, which has not been tested earlier to our knowledge, especially in the context of an emerging economy like China.

The impact of CEO narcissism and optimism on capital structure under pandemic conditions

PurposeThe purpose of our study is to study the impact of chief executive officer (CEO) optimism and narcissism on the company's capital structure.Design/methodology/approach(1) The authors opt for regression, machine learning and text analysis to explore the impact of narcissism and optimism on the capital structure. (2) We analyze CEO interviews and employ three methods to evaluate narcissism: the dictionary proposed by Anglin, which enabled us to assess the following components: authority, superiority, vanity and exhibitionism; count of first-person singular and plural pronouns and count of CEO photos displayed. Following this approach, we were able to make a more thorough assessment of corporate narcissism. (3) Latent Dirichlet allocation (LDA) technique helped to find the differences in the corporate rhetoric of narcissistic and non-narcissistic CEOs and to find differences between the topics of interviews and letters provided by narcissistic and non-narcissistic CEOs.FindingsOur research demonstrates that narcissism has a slight and nonlinear impact on capital structure. However, our findings suggest that there is an impact of pessimism and uncertainty under pandemic conditions when managers predicted doom and completely changed their strategies. We applied various approaches to estimate the gender distribution of CEOs and found that the median values of optimism and narcissism do not depend on sex. Using LDA, we examined the content and key topics of CEO interviews, defined as positive and negative. There are some differences in the topics: narcissistic CEOs are more likely to speak about long-term goals, projects and problems; they often talk about their brand and business processes.Originality/valueFirst, we examine the COVID-19 pandemic period and evaluate how CEO optimism and pessimism affect their financial decisions under specific external conditions. The pandemic forced companies to shift the way they worked: either to switch to the remote work model or to interrupt operations; to lose or, on the contrary, attract clients. In addition, during this period, corporate management can have a different outlook on their company’s financial performance and goals. The LDA technique helped to find the differences in the corporate rhetoric of narcissistic and non-narcissistic CEOs. Second, we use three methods to evaluate narcissism. Third, the research is based on a set of advanced methods: machine learning techniques (random forest to reveal a nonlinear impact of CEO optimism and narcissism on capital structure).

The effects of CEO duality, board size, and informal social networks on sustainable innovation and firm performance.

Corporate governance affects the ownership and control of a firm. Conflicts between agents, managers and shareholders caused the crises of WorldCom, Enron, Tyco and Lehman Brothers. Therefore, the impact of chief executive officer (CEO) duality or board size on sustainable innovation and performance of small and medium-sized enterprises (SMEs) is relevant for research and evaluation. This may reflect the CEO style that supports long-term business growth with limited resources to enhance accountability, fast decision-making, and minimise hindrances to governance, particularly in emerging markets like India. The finding will help SMEs in maintaining their long-term viability. The current study examines the impact of CEO duality, board size, and informal social networks on sustainable innovation, governance, and performance of Indian SMEs to enable management to assess the significance of factors that contribute to firms’ sustainable performance

Do Powerful CEOs Benefit Firm Performance in Pakistan?

Manuscript type: Research paper Research aims: This study examines the impact of Chief Executive Officer (CEO) power dimensions on firm performance. Design/Methodology/Approach: A panel data of 110 Pakistani firms listed on the Pakistan Stock Exchange for the period of 12 years (2008- 2019) was analysed using the GMM approach. Research findings: The GMM regression results revealed significant relationships. The analysis suggests that CEOs with considerable structural, ownership, prestige, and expert power tend to exhibit superior performance, as these factors are positively correlated with firm performance. Conversely, CEO family power appears to have no discernible impact on firm performance. Importantly, the robustness of our findings underscores the consistent nature of these relationships. Theoretical contribution/Originality: This study makes a valuable contribution to the existing literature by demonstrating the positive influence of CEO power on firm performance, which aligns with the theoretical framework of the Approach/Inhibition theory of power. The originality of this research stems from its examination of individual dimensions of CEO power and their impact on firm performance, as well as the inclusion of the additional dimension of family power. Practitioner/Policy implication: The insight from this study suggests that powerful CEO leadership is beneficial for firm performance and the concentration of power at the CEO position should be seen positively rather than the negative perspective provided by agency theory.

CEO power and corporate strategies: a review of the literature

In recent years, the impact of chief executive officers (CEOs) power on corporate strategies has attracted significant public debate in the academic milieu. In this study, we comprehensively review the academic literature on CEO power in relation to different corporate policies. We conduct a comprehensive review by dividing the literature into four streams: CEO power and firm performance, CEO power and executive compensation, CEO power and firm risk-taking, and finally, CEO power on other corporate strategies. Our review shows that the findings are mixed in relation to the effects of CEO power on firm strategies. Overall, the negative impact of CEO power on firm performance is attributed to agency theory, where CEOs pursue their own vested interests, thereby leading to weak corporate governance. The review reveals that the positive impact of CEO power on corporate outcomes is due to effective board monitoring, a powerful board, and high market competition. Our study also shows that most of the studies have adopted Finkelstein’s (1992) four sources of CEO power but have taken different proxies to measure these powers. We have also identified several gaps in the current studies and recommend avenues for further research.

CEO discretion and enterprise digital transformation

Digital transformation is a new development opportunity available to enterprises in the digital economy and represents a comprehensive application of digital technology in production, operation, and management. This study examined the impact of Chief Executive Officer (CEO) discretion on enterprise digital transformation using data from 2007 to 2022 of A-share listed companies in Shanghai and Shenzhen exchanges in China. The results suggest that CEO discretion enhances digital transformation performance, and the degree of CEO self-confidence plays a moderating role. The greater the degree of CEO self-confidence, the stronger the impact on digital transformation. Sex, age, educational background, and experience in finance affect discretionary powers of CEOs and its effect on digital transformation. The mechanism test revealed that corporate financialisation and technological innovation investment can play a mediating role. Additional analysis revealed that the facilitative effect of CEO discretion on digital transformation is stronger for non-state and large firms. This study enriched and expanded the behavioural theory in finance and related research on the factors influencing corporate digital transformation and provided empirical evidence on how firms can follow the digital development trends and accelerate the process of corporate digital transformation.

CEO Early-Life Disaster Experience and Tax Avoidance: Chinese Evidence

Synopsis The research problem This study examines the impact of chief executive officers (CEOs)’ early-life disaster experiences on corporate tax-avoidance behaviors and explores the mechanisms through which these experiences influence these behaviors. We use the Great Chinese Famine of 1959–1961 (hereafter the Great Famine) as an indicator of early-life disaster experience. Motivation or theoretical reasoning Our study is motivated by the following reasons. First, like many major economies worldwide, corporate income tax is an important source of tax revenue in China. The financial impact of corporate income tax on a country’s economy is enormous. Second, the Great Famine was one of the most destructive natural disasters in human history, which is likely to have a lifelong influence on CEOs who lived through the disaster as children and teenagers. Third, corporate tax strategy is a significant accounting, financing, and managerial behavior of firms that is influenced by multiple internal and external factors. However, there are limited findings on the impact of CEOs’ early-life disaster experience on corporate tax decisions. The consequences of this impact remain unclear. The test hypotheses We hypothesize that CEOs’ early-life famine experience mitigates corporate tax aggressiveness. We also consider the alternative hypothesis that CEOs’ early-life famine experience increases corporate tax aggressiveness. Target population Our sample includes Chinese listed firms from 2013 to 2020 led by CEOs who have or who do not have early-life disaster experiences. Adopted methodology We employed ordinary least square regressions in our analyses. Analyses Since the Great Famine occurred between 1959 and 1961, we considered CEOs to have experienced famine if they were born prior to or in the year 1961, in a province affected by the Great Famine (e.g., Hu et al. , 2020 ; Zhang , 2017 ). We identified a province as significantly affected by famine if its abnormal death rate was greater than the median abnormal death ratio of all Chinese provinces during the period of famine. Following Dyreng et al. ( 2010 ), Hoi et al. ( 2013 ), Koester et al. ( 2017 ), and Rego & Wilson ( 2012 ), we used effective tax rate as the first proxy of tax avoidance for a firm. Additionally, in line with Desai & Dharmapala ( 2006 ) and Hoi et al. ( 2013 ), we used the discretionary book-tax differences of firms as an alternative proxy to measure corporate tax avoidance. Findings The findings indicate that CEOs who experienced the Great Famine at a young age significantly reduced their firms’ tax-avoidance efforts. Furthermore, the negative association between CEOs’ early-life famine experiences and corporate tax-avoidance behaviors is more pronounced for companies with higher independent director ratios. These negative associations appear more obvious for firms with CEOs who experienced famine early in life and for females. The economic mechanism of the findings demonstrate that CEOs’ famine experiences make them more conservative in investing in innovative projects; they are more likely to fulfill corporate social responsibility and work in state-owned enterprises. Furthermore, firms with lower innovation expenditure, effective corporate social performance, and government ownership are less likely to display tax-avoidance behaviors.

Does CEO age affect the performance of banks in Indonesia?

The purpose of this study is to determine the impact of Chief Executive Officers (CEOs) age on the bank performance in a developing Southeast Asian capital market (Indonesia). The study uses unbalanced firm-level panel data for 40 banks listed on the Indonesia Stock Exchange (IDX) from 2010 to 2018. Net interest margin and capital adequacy ratio were used to measure bank performance. The data were analyzed using panel data regression analysis, including a fixed effects model. The results show that CEOs age improve bank performance proxied by net interest margin and reduce bank performance proxied by capital adequacy ratio. Age should be considered when appointing CEOs. Older CEOs have a competitive advantage over younger CEOs, who have less experience in business.

The impact of board ethnic diversity and Chief Executive Officer role on corporate social responsibility

AbstractWe examine the influence of board ethnic diversity on firms' corporate social responsibility (CSR) activities within modern day corporations. Using firm‐year observations in Australia from the period 2004–2017, we document that board ethnic diversity leads to better CSR performance and CSR disclosure. Our results suggest that for every additional ethnic cluster represented on the board, on average, a firm's CSR performance rating from ASSET4 is higher by 2.6% and the odds ratio of producing a CSR report increases by 38.8%. The results are robust to controlling for endogeneity (using both instrumental variable approach and difference‐in‐differences analysis) and alternate proxies to measure CSR performance and ethnic diversity. We also document the moderating impact of Chief Executive Officer (CEO) power on the relationship between board ethnic diversity and firms' CSR activities. Specifically, a less powerful CEO and a CEO of ethnic minority (i.e., non‐Anglo) are more likely to facilitate this relationship. This study adds to our understanding of how board ethnic diversity, an often‐overlooked factor in prior research, can have significant impacts on firm outcomes.

CEO personal characteristics and firms’ risk-taking behaviour: the moderating role of family ownership

PurposeThis study aims to examine the impact of chief executive officers’ (CEOs’) personal characteristics on firms’ risk taking and the moderating role of family ownership on this relationship.Design/methodology/approachThis study used 2,647 firm-year observations of non-financial firms listed on Pakistan Stock Exchange over the period 2013–2021. To test the hypotheses, the authors used ordinary least squares regression and, to resolve the possible endogeneity problem, the authors used system generalized method of moments technique.FindingsDrawing insights first from upper echelons theory, the authors report that CEOs with business, economics, finance and/or management educational background and female CEOs reduce firms’ risk-taking behaviour. Further, using insights from social and organizational identity theoretical perspectives, the results indicate that due to strong family affiliation and organizational identity, family owners exhibit risk aversion behaviour and moderate this relationship.Originality/valueThis study provides novel evidence of risk averse behaviour of CEOs with business, economics, finance and/or management educational background and female CEOs along with moderating impact of family ownership on this relationship in an emerging economy. Overall, the results extend empirical support for upper echelons and social identity theories in an emerging market context.

CEO attributes and foreign shareholdings: evidence from an emerging economy

Purpose This paper aims to examine the impact of chief executive officer (CEO) attributes on foreign shareholdings from the perspective of an emerging economy. Design/methodology/approach This study examined Bombay Stock Exchange listed firms from the Indian stock market and applied a balanced panel data approach with fixed effect estimation technique during the period 2010–2019. Findings The study shows that CEOs’ financial education and a higher level of education positively affect foreign shareholdings. The age and experience of CEO have a positive and significant impact on foreign shareholdings. Firms with male CEOs are preferred more by foreign investors. The effect of CEO busyness and CEO duality is negative on foreign shareholdings. Foreign investors prefer to invest in firms with foreign nationality CEOs. Furthermore, the robustness test reveals that the influence of CEO attributes on foreign shareholdings is stronger for new, small and stand-alone firms than for old, large and group-affiliated firms. Practical implications The study will be beneficial for a diverse audience ranging from firms’ board of directors, regulators and policymakers who are entrusted with the CEO recruitment process. Additionally, firms seeking external financing should disclose CEO information adequately and improve the reporting quality to attract foreign investors, as they consider CEO characteristics as a valuable signal before making investment decisions. Originality/value In light of the current legislative reforms, this study can be recognized as one of the early studies that explore the relationship between CEO attributes and foreign shareholdings in the context of an emerging economy.

Does CEOs’ green experience affect environmental corporate social responsibility? Evidence from China

This study explores the impact of chief executive officers’ (CEOs) green experience on environmental corporate social responsibility (ECSR) by analyzing the 5373 firm-year observations from China. The result shows that hiring green CEOs increases environmental protection investment (EPI), environmental compliance, and ESG ratings, significantly for firms in non-polluting sectors. Channel analysis shows that CEOs with green-related experience improve their environmental consciousness, which stimulates corporate environmental behavior. The positive effects of green CEOs are more pronounced in firms with high-quality digital transformation and better internal and external governance mechanisms. Our results survive a battery of robustness tests, such as endogeneity concerns, alternative measures, and heterogeneity analysis. Overall, this study provides a theoretical contribution to the study of managerial characteristics and environmental governance based on work experience and educational background in emerging countries.

The Impact of Chief Executive Officers on Earnings Management of Listed Companies in Vietnam

Profit is one of the indicators reflecting the growth in the operation of the business and is the fundamental goal in evaluating the manager's success this study examined the impact of Chief Executive Officers (CEO) on the earnings . Thus, management of companies listed on the Vietnam Stock Exchange. Using panel data of 485 listed companies in HOSE and HNX in the period 2016 - 2020, the results of multivariate regression according to the fixed effect model found that CEO expertise and founder were positively correlated with earnings management, and CEO age harmed earnings management. However, there is insufficient evidence to prove that CEO gender impacts earnings management. In addition, the study also admited that net cash flow from operating activities. Financial Leverage is related to earnings management. This study's findings contributed to the existing literature regarding the scientific debates about CEOs' characteristics, earnings management, and discretionary accruals in an emerging economy. Finally, the author proposed that managers engaged in earnings management for personal gain using their influence to interfere in applying policies for the earnings management of listed companies in Vietnam.

The impact of chief executive officers’ religiosity on banks’ financial performance in Indonesia

PurposeThe purpose of this study is to examine the effect of the religiosity of the chief executive officer (CEO) on Indonesian banks’ performance.Design/methodology/approachThe research method used was a review of the annual reports of banking companies in Indonesia from 2015 to 2019 and a web-based search to determine the religiosity of the CEOs. This study comprised 88 banking companies in Indonesia that come under the supervision of the Financial Services Authority.FindingsThe results of this study show that banks led by religious CEOs had better financial performance, as measured by their ROA and ROE, than those led by not very spiritual CEOs. These results indicate the importance of religiosity in organizations, especially at the top management level, for achieving better bank performance.Practical implicationsThis research results show that religiosity plays an essential role in the banking business sector. This research adds to the literature on CEOs’ characteristics based on their religiosity and the concomitant effect on banking performance.Originality/valueThis study shows how individual religious beliefs influence the corporate behavior of top management, particularly the CEOs, and why this is crucial for organizational decision-making. This study measures an individual's religiosity (i.e. a CEO) based on that individual's actions in their workplace environment.

What affects the quality of sustainability report texts? Evidence from China

AbstractWe relied on web crawlers and text analysis techniques to develop a new method for measuring the quality of sustainability report texts, and accordingly discussed the impact of chief executive officers' (CEOs') characteristics on the quality of sustainability report texts. We found that companies led by younger CEOs and CEOs with better‐educated, financial and overseas backgrounds provided higher quality sustainability reports, while companies led by female CEOs and CEOs with academic backgrounds provided poorer quality sustainability reports. We also unpacked the “black box” of sustainability report quality, grouping it into three aspects: comprehensiveness, objectivity and reliability. Further research found that CEO characteristics had a greater impact on the quality of sustainability reports in the sample of voluntary and non‐state‐owned enterprises. Our study has the potential to contribute to the selection of CEOs and the improvement of sustainability disclosure.

The impact of chief executive officers’ (CEOs’) overseas experience on the corporate innovation performance of enterprises in China

With growing competition among enterprises globally, innovation has become a significant measure of competitiveness. In the present study, we sample enterprises listed on China's A-share stock market (traded on the Shanghai Stock Exchange and Shenzhen Stock Exchange) from 2008 to 2020 to empirically explore the impact of chief executive officers’ (CEOs’) overseas experience on enterprises’ innovation performance. We find that CEOs’ overseas experience positively impacts enterprises’ innovation performance, and that research and development (R&D) investment and information-disclosure quality play intermediary roles. CEOs’ overseas background promotes enterprises’ innovation performance by increasing R&D investment and information-disclosure quality. Further analyses reveal that CEOs’ overseas experience plays a more significant role in boosting invention patents than in promoting utility-model and design patents, and that the positive role of CEOs’ overseas experience is more prominent in high-tech firms and enterprises with stronger internal control. The research results have certain theoretical and practical value in configuring top management to promote enterprises’ innovation.

The impact of chief executive officer (CEO) and deal characteristics on mergers and acquisitions (M&A) duration: A quantile regression evidence from an emerging market

This paper examines the impact of chief executive officer (CEO) and deal characteristics on mergers and acquisitions (M&A) duration in Malaysia. Univariate analysis and quantile regression (QR) are performed on 556 completed M&As transactions undertaken by Malaysian public firms from 2001 to 2019. In line with the upper echelons theory, which states that organizational outcomes can be predicted by looking at the characteristics of top-level executives, the findings from QR show that CEO characteristics significantly affect acquisition duration. This effect is conditional on the duration quantiles for CEO tenure and CEO duality but non-conditional for foreign CEO. Specifically, the findings reveal that the degree of influence by CEO characteristics gets stronger when the transactions are longer and complicated. CEO tenure can decrease M&A duration when a transaction falls in longer duration quantile. M&A transactions tend to take a longer duration when there is CEO duality. Foreign CEOs show more ability to execute transactions in a short duration compared to local CEOs. Deal characteristics such as deal size, merger transaction, hiring a financial advisor and conducting multiple acquisitions are main factors that prolong duration. The findings of this study may benefit policymakers, managers, and investors who involve directly and indirectly in an M&A process.

Hometown sentiment: CEO hometown identity and company audit fees

PurposeThe purpose of this study is to examine the impact of chief executive officer (CEO) hometown identity on company audit fees in the Chinese setting.Design/methodology/approachThis study uses data from Chinese public companies in the Shanghai Stock Exchange and the Shenzhen Stock Exchange for the period 2008–2019. This study investigates the impact path of CEO hometown identity on company audit fees and further examines the moderating role of internal and external governance level.FindingsThis study finds that CEO hometown identity is significantly and negatively related to company audit fees. In addition, CEO hometown identity can reduce audit fees by alleviating agency risk and litigation risk. Moreover, the negative effect of CEO hometown identity on audit fees is more pronounced in companies with a higher percentage of institutional investors shareholding and more analysts tracking quantity.Practical implicationsThis study may provide new references for executives’ selection, auditors’ optimization decisions and regulators’ information disclosure system.Originality/valueThis study contributes to the literature by exploring the effect of CEO hometown identity on audit fees in the context of China.