The Accounting Review Vol. 96 No. 6 2021

CEO Tenure and Firm Value

François Brochet¹; Peter Limbach²; Markus Schmid³; Meik Scholz-Daneshgari⁴

¹ Boston University · ² University of CologneCentre for Financial Research · ³ University of St.Gallen · ⁴ Karlsruhe Institute of Technology

Abstract

Our study is the first to provide systematic evidence of a hump-shaped CEO tenure-firm value relation. Cross-sectionally, firm value starts to decline after fewer years of CEO tenure in more dynamic industries, if CEOs are less adaptable to changes, and in the presence of greater labor market frictions. Overall, the dynamics of CEO-firm match quality appear to be a first-order driver of the CEO tenure-firm value association, as explained by CEO characteristics (adaptability), firm/industry characteristics (dynamism), and labor market characteristics that facilitate optimal matching between firms and CEOs. Data Availability: Data used in this study are available from public sources identified in the study.

DOI

10.2308/tar-2019-0295

Volume

96

Issue

6

Pages

47-71

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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