With Great Power Comes Great Flexibility: The Impact of Prestigious CEO Awards on Innovation

54 Pages Posted: 11 May 2020

See all articles by Julian Atanassov

Julian Atanassov

University of Nebraska

Keun Jae Park

Washington & Jefferson College

Date Written: April 15, 2020

Abstract

Contrary to the previous literature, we document that winning a prestigious CEO award can be beneficial to firms by reducing managerial career concerns and encouraging long-term productivity. Using propensity score matching techniques, we find that award-winning CEOs innovate more than the control group, both in terms of the number of patents and the number of citations per patent. This finding is consistent with both managerial flexibility and overconfidence theories, and inconsistent with the private benefits view. After further analysis, we show that there is a clear increase in CEO power and job security after winning a prestigious award and no such increase in several measures of overconfidence. We also document that the positive effect of CEO awards on innovation is weaker for firms with high institutional ownership. These results provide overall support for the managerial flexibility theory.

Keywords: superstar CEO, business awards, prestigious awards, innovation, managerial entrenchment, corporate governance, agency theory, managerial myopia, overconfidence, institutional ownership

JEL Classification: O31, G34

Suggested Citation

Atanassov, Julian and Park, Keun Jae, With Great Power Comes Great Flexibility: The Impact of Prestigious CEO Awards on Innovation (April 15, 2020). Available at SSRN: https://ssrn.com/abstract=3576629 or http://dx.doi.org/10.2139/ssrn.3576629

Julian Atanassov

University of Nebraska ( email )

CBA
University of Nebraska, Lincoln
Lincoln, NE 68588
United States

Keun Jae Park (Contact Author)

Washington & Jefferson College ( email )

60 S Lincoln St
Washington, PA 15301
United States

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