CEOs and the Product Market: When Are Powerful CEOs Beneficial?

B-Tier
Journal: Journal of Financial and Quantitative Analysis
Year: 2019
Volume: 54
Issue: 6
Pages: 2295-2326

Authors (3)

Li, Minwen (not in RePEc) Lu, Yao (not in RePEc) Phillips, Gordon M. (Dartmouth College)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We examine whether industry product market conditions are important in assessing the benefits and costs of chief executive officer (CEO) power. We find that firms are more likely to have powerful CEOs in high demand product markets where firms are facing entry threats. In these markets, investors react favorably to announcements granting more power to CEOs, and CEO power is associated with higher market value, sales growth, investment, advertising, and the introduction of more new products. Our results remain significant when addressing the endogeneity of CEO power by instrumenting CEO power with past non-CEO executive and director sudden deaths.

Technical Details

RePEc Handle
repec:cup:jfinqa:v:54:y:2019:i:6:p:2295-2326_1
Journal Field
Finance
Author Count
3
Added to Database
2026-01-29