Do CEOs Matter? Corporate Performance and the CEO Life Cycle

Item Type Monograph (Working Paper)
Abstract

This study suggests that the effect of CEOs on the firms they run varies over time. We document an inverted U-shaped relation between CEO tenure and firm value as well as M&A announcement returns, consistent with the posited net effect of benefits (e.g., learning, relations) and costs (e.g., aversion to change, entrenchment) arising dynamically over the CEO’s time in office. We find economically
meaningful variation in the point in time at which costs of tenure start to outweigh benefits depending on a firm’s economic environment that affects costs and benefits of tenure. Nonparametric estimations,
exogenous shocks to the cost-benefit relation of tenure, and an analysis of CEO sudden deaths further support our findings.

Authors Limbach, Peter; Schmid, Markus & Scholz, Meik
Language English
Keywords (within-)CEO heterogeneity, CEO tenure, CEO term limits, economic environment, firm value, mergers and acquisitions
Subjects business studies
finance
HSG Classification contribution to scientific community
Refereed No
Date 2015
Publisher SoF - HSG
Place of Publication St. Gallen
Series Name School of Finance Working Paper Series
Number 2015/11
Number of Pages 63
Official URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id...
Depositing User Prof. Dr. Markus Schmid
Date Deposited 09 Jul 2015 17:18
Last Modified 17 Jun 2021 00:23
URI: https://www.alexandria.unisg.ch/publications/242402

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Citation

Limbach, Peter; Schmid, Markus & Scholz, Meik: Do CEOs Matter? Corporate Performance and the CEO Life Cycle. School of Finance Working Paper Series, 2015, 2015/11.

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https://www.alexandria.unisg.ch/id/eprint/242402
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