CEO grandiose narcissism and firm performance: The role of organizational identification

This study reconciles the positive and negative sides of CEO grandiose narcissism by examining the role that CEO organizational identification plays in moderating the effect of CEO grandiose narcissism on top management team (TMT) behavioral integration. We first distinguish between grandiose and vulnerable narcissism and we then draw on upper echelons theory and executive personality research to hypothesize and test a model in which CEO grandiose narcissism is positively related to TMT behavioral integration when CEOs are high in organizational identification. The relationship is expected to be negative when CEOs do not identify strongly with their organizations. TMT behavioral integration, in turn, predicts subsequent firm performance. Findings based on multi-source data from a sample of 97 CEOs and their firms supported the hypotheses. These results highlight the complex nature of CEO grandiose narcissism – namely, that the construct has both positive and negative aspects as it relates to top management team dynamics and firm performance and that the relationship is affected by CEOs' identification with their organizations.     

CEO burnout,managerial discretion,and firm performance: The role of CEO locus of control,structural power,and organizational factors

Despite the possibility of burnout resulting from dynamics in firms' upper echelons, little if any work has focused on chief executive officer's (CEO's) burnout and firm performance. Drawing on managerial discretion theory, this article analyzes the influence of CEO burnout on firm performance and the moderating roles of the individual (CEO locus of control), structural power (CEO duality and CEO tenure), and organizational characteristics (size, age, and resource availability) related to managerial discretion. Using a sample of 156 CEOs in Swedish firms, we find a negative association between CEOs who report higher burnout and firm performance. Our results confirm that CEO duality and resource availability ameliorate and firm size exacerbates the negative association between CEO burnout and firm performance. Contrary to our expectations, CEO locus of control, CEO tenure, and firm age do not influence this relationship. We discuss the implications of our research for upper echelons theory and strategic leadership theory.     

Friend or Foe? CEO gender,political ideology,and gender-pay disparities in executive compensation

Do female CEOs reduce gender-pay disparities in top management teams (TMTs)? Some scholars draw on social identity theory to argue that, as individuals tend to identify with and support their in-groups, appointing a female corporate leader (i.e., CEO) will mitigate the gender-pay gap among executives. Yet, others draw on the queen-bee syndrome to postulate that some female CEOs may rather strengthen gender-pay disparities in upper echelons – by favoring out-groups (male) more than their in-groups (female). We bring together these opposing theoretical arguments to develop a ‘beyond CEO gender’ perspective, arguing that the effects of CEO gender on TMT gender-pay disparities should be considered in conjunction with the corporate leaders' values – as reflected by their political ideology. Our research demonstrates that conservative-female CEOs compensate female (versus male) executives lower compared to all other CEO gender-ideology categories (i.e., female-liberal CEOs, male-liberal CEOs, and male-conservative CEOs). Overall, our work contributes to theory on the CEO-TMT interface by highlighting the role of the CEO as the ‘architect’ of executive remuneration.     

Do CEOs exercise managerial discretion to save their jobs?

Chief Executive Officers (CEOs) wield considerable power and authority. In many industries and contexts, CEO turnover is studied in terms of antecedents, the event itself, and the related consequences. However, the extent to which CEOs exert their power and attempt to prevent their dismissal has not been thoroughly examined. In this study, we examine the role of CEOs exercising managerial discretion in their effort to prevent their own corporate demise. We hypothesize that CEOs cut discretionary expenses such as research and development, advertising, and rent in order to boost earnings and enhance financial performance. A sample of CEO turnover from Standard and Poor’s ExecComp database for the period 1992–1998 in US firms yielded 474 turnover firms and 2,066 control firm-years. We tested the effects of CEO turnover and managerial discretion on firm performance measured by cumulative abnormal stock returns. We also compared the turnover and non-turnover firms in terms of pattern of discretionary spending prior to CEO turnover. The results are consistent with our prediction that CEOs facing termination attempt to post higher earnings by reducing discretionary spending after controlling for firm performance, firm diversification, book to market ratio, and CEO ownership, industry-, and year dummies.     

Board age and corporate financial fraud: An interactionist view

Unlike past studies which have focused on either executives or boards of directors, this study takes an interactionist view to investigate the determinants of corporate financial fraud. We propose that CEOs evaluate the opportunities for financial fraud according to both situational stimuli and their own personal characteristics. As older directors are often more experienced and have more to lose if they fail in their monitoring duties, we expect them to be more capable and to have stronger motivation for monitoring CEOs closely. As such, we propose that a CEO is less likely to engage in corporate financial fraud when the average age of the board of directors increases (i.e., board age). However, when the CEO is older than the board, the CEO may attach less importance to board age when deciding whether to commit fraud. Therefore, we further propose that the CEO–board directional age difference can weaken the effect of board age. Our empirical analyses provide strong support for these hypotheses. Our study contributes to the literature on corporate governance by highlighting the often neglected roles of board age and CEO–board directional age difference in deterring corporate financial fraud.     

Gaining the ultimate power edge: Women in the dual role of CEO and Chair

Using archival data, the authors explored whether female CEOs possess as much structural power as male CEOs and what demographic characteristics are essential for female CEOs to have in order to increase their structural power in their firms. The authors use status characteristics and human capital theories to develop hypotheses. Findings show that female CEOs do not possess as much structural power as male CEOs as proxied by attaining a dual CEO/Chair role in the firm. Instead of dual CEO and Chair roles, female CEOs are more likely to be given the less powerful role of CEO and President. Moreover, female CEOs are more likely to gain structural power if they are entrepreneurs, work in large companies, or possess an elite education.     

影响CEO过度自信的因素分析——来自我国上市公司的经验证据

在前人研究的基础上,以2007~2008年我国A股上市公司的CEO为样本,运用主成分分析法和logistic回归法对影响CEO过度自信的因素进行了实证检验。研究发现,任职期限长以及与董事长两职合一的CEO倾向于过度自信;所处行业风险大的上市公司CEO容易过度自信;资产负债率较高公司的CEO易于表现出过度自信;董事会规模、最终控制人和公司的资产规模三者与CEO的过度自信存在负相关关系。CEO个人特征对CEO的过度自信水平没有影响,这说明年龄、学历、文化程度等个人特征并非是影响CEO过度自信的因素。     

Power and Pay: The Politics of CEO Compensation

This paper examines CEO compensation, with an emphasis on the power of CEOs to influence their own compensation by managing the compensation process. It analyzes the CEO's power over the board of directors and the political tactics used by the CEO to manage the board and its compensation decisions. An empirical examination of CEO compensation in 203 large American manufacturing firms in 1985 illustrates the effect of CEO power on compensation and the flexibility available to the CEO in establishing the legitimacy of compensation. The implications of this perspective for management control of corporations and for CEO compensation research are considered.     

关于中国上市公司经营者持股情况的研究

本研究以中国上市公司为抽样总体,从上千家企业中随机抽取315家企业作为样本进行统计分析,对2000年上市公司经营者的持股情况进行总体考察,结果发现,2000年经营者的货币年薪比前两年有了很大程度的提高,但是,股票持有量并没有太大的变化,经营者“零持股”的现象仍然大量存在;从中美企业经营者薪酬结构的比较中可以看出,我国经营者激励形式单一,结构具有不合理性,股票期权等长期激励所占的比例非常小;我国经营者的年薪与持有的股票数量正相关;Logistic回归发现能够显著预测经营者是否获得股票的变量只有净资产收益率和经营者的年龄两个变量。但是,净资产收益率的作用却是反向的。     

Relational Ownership and CEO Continuity: A Property Rights Perspective

Inspired by agency theory, research on Chief Executive Officer (CEO) succession often focuses on turnovers as a mechanism to discipline CEOs in the event of poor firm performance. Recent research extends this view by showing that CEO turnovers can also lead to substantial disruption in a firm's management. Less is known, however, about the antecedents of disruption and continuity in the context of CEO turnovers. Drawing on modern property rights theory, we investigate how CEO continuity varies across different types of firms. Using a sample of Swiss publicly traded firms, we find that relational ownership enhances the likelihood of CEOs staying in office or moving to the position of board chair. Firms with little relational ownership, in contrast, display a high degree of CEO continuity only when capital intensity is high. Provided that a CEO turnover occurs, relational ownership and capital intensity reduce the likelihood of interim CEO successions. These findings highlight the importance of a nuanced view of CEO continuity, taking into account owner types as well as contextual factors.     

The financial crisis,acquisition premiums and the moderating effect of CEO power

The recent financial crisis brought upon a period of increased information uncertainty for firms and market agents and in the context of mergers and acquisitions, increased information asymmetry between bidders and targets. This led to an overall increase in average acquisition premiums. However, the final realized premium can be moderated through CEO characteristics in dealing with such issues as uncertainty and asymmetry. Bidder CEOs can reduce these premiums through their expertise, networks and control: powerful CEOs will tend to pay smaller premiums than weaker CEOs because they are better equipped to deal with the increased information uncertainty and asymmetry, either through risk-averse behavior or better assessment of target quality. Our results based on a six-year sample of S&P500 firms engaged in M&A activity, and centered on the onset of the recent financial crisis, largely support our predictions. While earlier research suggested that CEO power could lead to higher premiums, our study points to the opposite conclusion: during times of financial crisis, CEO power effectively constrains premiums. This extends our understanding of why bidder CEOs overpay beyond the role of bidder anchoring bias, hubris, and target resistance by considering the role of macro-environmental conditions and power.     

Monitoring the monitor: Enabling strategic change when the former CEO stays on the board

Firms often retain their former CEOs on the board after succession to benefit from the former CEOs’ firm-specific expertise. However, their presence can inhibit successor CEOs from implementing meaningful strategic change, as the former CEOs seek to preserve their personal legacy and may see the strategic landscape differently, especially when the successor CEO is hired from outside the firm. Using a strategic leadership interface perspective, we propose that board members can alleviate this potential tension and enable strategic change. To test our theory, we focus on a subsample of succession events: when the former CEO stays on board as chair and the successor CEO is an outsider. This scenario is likely to result in strategic tension and cognitive differences between these two organizational leaders. We find that in such situations, boards with a higher proportion of outside directors experience greater post-succession strategic change; we find no effect in other succession scenarios. We isolate legacy conservation as a motivating factor by showing that the effect manifests for divestitures but not for acquisitions.     

CEO health

Using comprehensive data on 28 cohorts in Sweden, we analyze CEO health and its determinants and outcomes. We find CEOs are in much better health than the population and on par with other high-skill professionals. These results apply in particular to mental health and to CEOs of larger companies. We explore three mechanisms that can account for CEOs’ robust health. First, we find health predicts appointment to a CEO position. Second, the CEO position has no discernible impact on the health of its holder. Third, poor health is associated with greater CEO turnover. Here, both contemporaneous health and health at the time of appointment matter. Poor CEO health also predicts poor firm outcomes. We find a statistically significant association between mental health and corporate performance for smaller-firm CEOs, for whom a one standard deviation deterioration in mental health translates into a performance reduction of 6% relative to the mean.     

Hedging and accounting-based RPE contracts for powerful CEOs

Several firms prohibit their CEOs from trading in the stock of peer firms. This is puzzling since hedging by the CEO through private trading in the capital market can reduce the CEO’s exposure to systematic compensation risk. When the CEO’s incentive contract comprises relative performance evaluation, we find that the firm might want to disallow private hedging even though there are no technological interdependencies or strategic interactions to peer firms. In the analysis, we highlight two frequently observed characteristics of incentive contracts. First, the use of accounting benchmarks is widespread in compensation contracts for CEOs. Second, empirical and anecdotal evidence suggests that powerful CEOs have influence on the process of designing their own compensation. We find that in the presence of a powerful CEO, the firm can benefit from disallowing private hedging. In particular, the firm’s decision to allow or to disallow private hedging depends on the characteristics of the accounting benchmarks and the characteristics of the peer firms.     

Re‐examining the Glass Cliff Hypothesis using Survival Analysis: The Case of Female CEO Tenure

We use the glass cliff to study the appointment and employment duration of 193 female CEOs between 1992 and 2014 in a sample of large, small and mid‐size North American firms. Consistent with the glass cliff, we find that women are appointed as CEOs in precarious situations. However, we find female CEOs are 40% less likely to face turnover at any point after appointment than male CEOs. This conflicts with an implication of the glass cliff and differs significantly from existing research which shows that female CEOs have only a slightly lower risk of turnover than male CEOs. Our larger, more recent sample captures changes in the labour market that explain the departure from the results of earlier studies. We find evidence that the lower turnover rate of female CEOs is related to firms’ desire to avoid the negative publicity that would accompany their termination, and we also show that greater education has a positive impact on CEO job security.     

The double-edged sword of CEO/chairperson duality in corporatized state-owned firms: evidence from top management turnover in China

This study examines how board leadership structure (CEO duality) affects the corporate governance of corporatized state-owned firms where the state shareholders use these firms to serve both profit and non-profit objectives. We propose that CEO duality will generate a positive (negative) significant impact on the firms’ corporate governance when state owners tend to monitor their CEOs on the basis of profit (non-profit) considerations. We test our hypotheses by examining the relations between CEO duality and CEO turnover in Chinese listed companies that are ultimately controlled by central or local governments. We find that CEO duality is negatively related to turnover in marginal profit-making firms where turnover would be value-enhancing. This suggests that CEO duality is detrimental to these firms’ corporate governance because it entrenches relatively poorly performing CEOs. Duality is also negatively related to turnover in high-profitability firms where turnover would be non-value-enhancing. This suggests that CEO duality might positively contribute to the corporate governance of these firms by reducing the occurrence of non-value enhancing turnover. Overall, our study suggests that CEO duality is a double-edged sword in corporatized state-owned firms.     

Benefiting from CEO's empowerment of TMTs: Does CEO–TMT dissimilarity matter?

This study examines empowering leadership from an upper echelons perspective by focusing on top management teams (TMTs) and considering the demographic dissimilarities between the CEO and other TMT members. Data from a multisource survey of 129 Chinese firms demonstrate the importance of the fit between the backgrounds of the leader and the TMT members. Although empowerment of TMTs by CEOs predicts superior organizational performance in general, the findings show that this practice is most beneficial when the CEO and the TMT members differ in their informational demographics but have a longer tenure overlap. If either dissimilarity in informational demographics or tenure overlap is lacking, the CEO's empowerment of the TMT has a less positive effect on firm performance. Essentially, a three-way interaction is demonstrated. Introducing boundary conditions for the empowerment of TMTs by CEOs and testing their interactive influence broadens our understanding of how CEO leadership style can affect organizational performance, and refines the guidance for practitioners on TMT management.     

Unternehmenserfolg, Wechsel im Vorstandsvorsitz und Disziplinierung von Finanzvorständen

The Chief Financial Officer (CFO) is often referred to as a company’s No. 2 on contemporary management boards; yet corresponding empirical evidence is scarce. As a result, academic literature has not yet investigated whether CFOs—like CEOs—are dismissed more frequently if corporate performance is poor and to what extent forced Chief Executive Officer (CEO) turnover also influences disciplinary action towards CFOs. Therefore, in this paper we examine the antecedents of forced CFO departures in the largest German corporations between 1999 and 2006. Building on principal-agent theory, we expect respective relationships between the board of directors, the CEO, and the CFO. Moreover, we propose that principals also take team-specific and firm-specific human capital into consideration when disciplining agents. We find that poor corporate performance and forced CEO turnover both independently increase the likelihood of CFO dismissal. In addition, we find indications for a close team relationship between CFOs and CEOs. In summary, our results support the prominent role of CFOs alongside CEOs on contemporary management boards and suggest a more detailed consideration of CFOs in future research on performance consequences of managerial successions.     

Do transformational CEOs always make the difference? The role of TMT feedback seeking behavior

In the present paper, we raise the question whether CEO transformational leadership invariably makes a difference for team performance and change effectiveness. Since in general, CEOs are surrounded by a team of highly influential top managers, we argue that the effectiveness of CEO transformational leadership is contingent on the feedback seeking behavior of their top management team (TMT). Data from 38 TMTs and their CEOs demonstrated that transformational leadership was positively related to both TMT performance and effectiveness of organizational change, but only when the TMT engaged in low levels of feedback seeking behavior. As predicted, there was no relationship between CEO transformational leadership and performance and change effectiveness for teams exhibiting high levels of feedback seeking behavior. These findings suggest that for high-feedback seeking TMTs, organizational results can be achieved without a transformational CEO.     

The perks of narcissism: Behaving like a star speeds up career advancement to the CEO position

It is widely acknowledged that narcissism is a peculiar characteristic of leaders, such as CEOs. However, the role of narcissism in CEO emergence and appointment has not been studied yet. We overcome this gap by studying whether having a highly narcissistic personality allows individuals to become CEOs sooner. We posit that these individuals have quicker career development, climbing the hierarchical chain faster. We also hypothesize that this relation may be moderated by the firm's characteristics, comparing family and nonfamily firms. Family firms are the most widespread organizational form of firms around the world, and their peculiarities might affect the appointment of narcissistic CEOs. Estimates on a sample of 172 individuals partially confirm the hypotheses. Highly narcissistic individuals become CEOs quicker, regardless of whether the firm is a family business or not. Narcissistic individuals thus benefit from their personality when aiming at becoming CEOs faster in their career advancement.