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Powerful CEOs and their Impact on Corporate Performance

Renee B. Adams
UQ Business School, University of Queensland; European Corporate Governance Institute (ECGI)

Heitor Almeida
University of Illinois at Urbana-Champaign; National Bureau of Economic Research (NBER)

Daniel Ferreira
London School of Economics & Political Science (LSE) - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

September 10, 2003

AFA 2004 San Diego Meetings; EFA 2002 Berlin Meetings Discussion Paper

Abstract:
Executives can only impact firm outcomes if they have influence over crucial decisions. Based on this idea we develop and test the hypothesis that firms whose CEOs have more decision-making power should experience more variability in performance. We construct proxies for the CEO's power to influence decisions and show that stock returns are significantly more variable for firms run by powerful CEOs. We find similar results using alternative measures of performance. These findings suggest that the interaction between executive characteristics and organizational variables may have important consequences for firm performance.

JEL Classifications: G34, G12

Working Paper Series

Date posted: November 11, 2003 ; Last revised: April 23, 2008

Suggested Citation

Almeida, Heitor, Adams, Renee B. and Ferreira, Daniel, Powerful CEOs and their Impact on Corporate Performance (September 10, 2003). AFA 2004 San Diego Meetings; EFA 2002 Berlin Meetings Discussion Paper. Available at SSRN: http://ssrn.com/abstract=312184 or doi:10.2139/ssrn.312184

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Contact Information

Heitor Almeida (Contact Author) University of Illinois at Urbana-Champaign ( email ) 515 East Gregory Drive 4037 BIF Champaign, IL 61820 United States 217-3332704 (Phone) HOME PAGE: http://www.business.illinois.edu/FacultyProfile/faculty_profile.aspx?ID=11357
National Bureau of Economic Research (NBER) 1050 Massachusetts Avenue Cambridge, MA 02138 United States
Renée B. Adams UQ Business School, University of Queensland ( email ) Brisbane, QLD 4072 Australia +61 7 336 57285 (Phone) +61 7 3365 6988 (Fax)
European Corporate Governance Institute (ECGI) c/o ECARES ULB CP 114 B-1050 Brussels Belgium HOME PAGE: http://www.ecgi.org
Daniel Ferreira London School of Economics & Political Science (LSE) - Department of Finance ( email ) Houghton Street London WC2A 2AE United Kingdom (+44) 20 7955 7544 (Phone) HOME PAGE: http://personal.lse.ac.uk/FERREIRD/
European Corporate Governance Institute (ECGI) c/o ECARES ULB CP 114 B-1050 Brussels Belgium HOME PAGE: http://www.ecgi.org
Centre for Economic Policy Research (CEPR) ( email ) 90-98 Goswell Road London EC1V 7RR United Kingdom

Abstract

References (54)

Citations (48)

Date posted: November 11, 2003 ; Last revised: April 23, 2008

Suggested Citation

Contact Information

Heitor Almeida (Contact Author)

Renée B. Adams

Daniel Ferreira