A Study of CEO Power, Firm Size, and Firm Performance
Posted: 20 May 2020
Date Written: April 23, 2020
Abstract
Agency Problems are caused by interest conflicts between CEO and shareholders, and CEO power worsens the agent-principal relationship and affects firm performance. This study extends the existing research on CEO power and firm performance by including firm size as an important factor that affects the impact of CEO power on firm performance. We examine the relationship between firm size and firm performance, the relationship between CEO power and firm performance, whether firm size matters when we examine the effect of CEO power on firm performance. The results indicate there is a strong positive relationship between firm size and firm performance. We cannot conclude the exact relationship between CEO power and firm performance because the impact of CEO power on firm performance varies by using different CEO power and firm performance measurements. Also, we find the relationship between CEO power and firm size is different significantly between small and large firms.
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