CEO Busyness and Firm Performance: Evidence From Indonesia

Heliyon 5 (2019) e01601

9 Pages Posted: 20 Apr 2020

See all articles by Iman Harymawan

Iman Harymawan

Universitas Airlangga

Mohammad Nasih

affiliation not provided to SSRN

Melinda Cahyaning Ratri

Airlangga University

John Nowland

City University of Hong Kong

Date Written: 2019

Abstract

This study investigates whether busy CEOs are associated with lower firm performance, and if this relationship is moderated by firm growth, CEO tenure and corporate governance practices in Indonesia. This study uses 876 firms-year observations from 268 firms listed on the Indonesia Stock Exchange (IDX) for the period spanning 2014 to 2017. We find that busy CEOs are associated with lower firm performance. This negative relationship is stronger in firms with high growth and when busy CEOs have shorter tenure. We also show that corporate governance practices have no impact on the negative relationship between CEO busyness and firm performance. For firms and shareholders, our findings indicate that it is not a good idea for CEOs to hold two or more outside directorships, particularly in the early years of taking up their CEO position. Our results suggest that restrictions on CEO busyness would be beneficial to shareholders.

Keywords: Business Economics

Suggested Citation

Harymawan, Iman and Nasih, Mohammad and Ratri, Melinda Cahyaning and Nowland, John, CEO Busyness and Firm Performance: Evidence From Indonesia (2019). Heliyon 5 (2019) e01601, Available at SSRN: https://ssrn.com/abstract=3561994

Iman Harymawan (Contact Author)

Universitas Airlangga ( email )

JL. Airlangga no 4
Surabaya, East Java 60286
Indonesia

HOME PAGE: http://www.feb.unair.ac.id

Mohammad Nasih

affiliation not provided to SSRN

Melinda Cahyaning Ratri

Airlangga University ( email )

Jl. Darmawangsa Dalam 2
Surabaya, 60286
Indonesia

John Nowland

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China

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

Paper statistics

Downloads
12
Abstract Views
133
PlumX Metrics