36 Pages Posted: 11 Nov 2003
Date Written: September 10, 2003
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 Classification: G34, G12
Suggested Citation: Suggested Citation
Almeida, Heitor and 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: https://ssrn.com/abstract=312184 or http://dx.doi.org/10.2139/ssrn.312184