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Powerful CEOS and Their Impact on Corporate Performance

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

36 Pages Posted: 11 Nov 2003

See all articles by Heitor Almeida

Heitor Almeida

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

Renee B. Adams

University of Oxford; European Corporate Governance Institute (ECGI)

Daniel Ferreira

London School of Economics - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Date Written: September 10, 2003

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 Classification: G34, G12

Suggested Citation

Almeida, Heitor and Adams, Renée 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

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

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Daniel Ferreira

London School of Economics - 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 the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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