CEO Tenure and Firm Value

50 Pages Posted: 3 Jul 2015 Last revised: 10 Aug 2021

See all articles by Francois Brochet

Francois Brochet

Boston University - Department of Accounting

Peter Limbach

University of Bielefeld; Centre for Financial Research (CFR)

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance; University of St. Gallen - School of Finance

Meik Scholz-Daneshgari

Karlsruhe Institute of Technology

Date Written: December 22, 2020

Abstract

Our study is the first to provide systematic evidence of a hump-shaped CEO tenure-firm value relation. Cross-sectionally, firm value starts to decline after fewer years of CEO tenure in more dynamic industries, if CEOs are less adaptable to changes, and in the presence of greater labor market frictions. Overall, the dynamics of CEO-firm match quality appear to be a first-order driver of the CEO tenure-firm value association, as explained by CEO characteristics (adaptability), firm/industry characteristics (dynamism), and labor market characteristics that facilitate optimal matching between firms and CEOs.

Keywords: CEO adaptability; labor market frictions; environmental dynamics; firm value

JEL Classification: G30, G34, J24

Suggested Citation

Brochet, Francois and Limbach, Peter and Schmid, Markus and Scholz-Daneshgari, Meik, CEO Tenure and Firm Value (December 22, 2020). Paris December 2015 Finance Meeting EUROFIDAI - AFFI, University of St.Gallen, School of Finance Research Paper No. 2015/11, Available at SSRN: https://ssrn.com/abstract=2626340 or http://dx.doi.org/10.2139/ssrn.2626340

Francois Brochet

Boston University - Department of Accounting ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Peter Limbach (Contact Author)

University of Bielefeld ( email )

Centre for Financial Research (CFR) ( email )

Albertus-Magnus-Platz
Köln, 50923
Germany

HOME PAGE: http://www.finance.uni-koeln.de

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance ( email )

Unterer Graben 21
St. Gallen, 9000
Switzerland

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Meik Scholz-Daneshgari

Karlsruhe Institute of Technology ( email )

Kaiserstraße 12
Karlsruhe, Baden Württemberg 76128
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,014
Abstract Views
5,419
rank
28,335
PlumX Metrics