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Powerful CEOs and Their Impact on Corporate Performance

Renée B. Adams¹; Heitor Almeida²; Daniel Ferreira³

¹ Stockholm School of Economics · ² New York University · ³ Universidade Nova de Lisboa

Executives can only impact firm outcomes if they have influence over crucial decisions. On the basis of this idea, we develop and test the hypothesis that firms whose CEOs have more decision-making power should experience more variability in performance. Focusing primarily on the power the CEO has over the board and other top executives as a consequence of his formal position and titles, status as a founder, and status as the board's sole insider, we find that stock returns are more variable for firms run by powerful CEOs. Our findings suggest that the interaction between executive characteristics and organizational variables has important consequences for firm performance. Copyright 2005, Oxford University Press.

DOI

10.1093/rfs/hhi030

Volume

18 (4)

Pages

1403-1432

Language

en

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