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When does a generalist CEO create shareholder value? The effect of managerial challenge

Sergey Gelman¹; Russell Fralich²; Alex Bitektine¹; Sara Zahraei¹

¹ Concordia University · ² HEC Montréal

We find that the expected contribution of new CEO's experience to firm value depends on the degree of managerial challenge faced in the hiring firm. We identify two firm dimensions of such challenge: 1) firm complexity and 2) prior poor performance of the firm. Using a multi-industry 15-year sample of 1095 newly appointed CEOs of U.S. public firms, we find that CEO's experience benefits investors only when the firm is complex and/or struggling. The more complexity or performance challenge the firm is facing, the greater is the positive effect of CEO generalist experience on shareholder value.

DOI

10.1016/j.jcorpfin.2025.102917

Volume

97

Pages

102917

Language

en

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BibTeX

Sources

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