Journal of Corporate Finance Vol. 16 No. 3 2010

CEO decision horizon and firm performance: An empirical investigation

Murad J. Antia¹; Christos Pantzalis¹; Jung Chul Park²

¹ University of South Florida · ² Louisiana Tech University

Abstract

We investigate the effect of top managers' myopia on firms' market valuation. We devise a measure of expected CEO tenure as a proxy for the length of CEO decision horizon. After accounting for the endogenous nature of CEO horizon, our empirical tests show that shorter CEO horizon is associated with more agency costs, lower firm valuation and higher levels of information risk. The results are consistent with the notion that a short CEO decision horizon is indicative of preference for investments that offer relatively faster paybacks at the expense of long-term value creation.

DOI

10.1016/j.jcorpfin.2010.01.005

Volume

16

Issue

3

Pages

288-301

Language

en

Sources

bibtex:phds-export.bib crossref openalex

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓