Growth and market share matrix, CEO power, and firm performance

Gunasekarage, Abeyratna; Luong, Hoa; Truong, Thanh

doi:10.1016/j.pacfin.2019.101257

Cited by 14 publications

(17 citation statements)

References 50 publications

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“…Moreover, the coefficient estimates in model (3) for governance variables (i.e., BSIZE and CEO Duality) are positive and statistically significant at less than the 1% level. Hence, our findings support the argument that larger boards (Kassinis & Vafeas, 2002) and CEO power (Gunasekarage et al, 2020; Shahab et al, 2020) cause hindrance in environmental measures, which in turn leads to a higher cost of debt. The coefficient estimates in model (3) for board independence (BINDE) and gender diversity (DIVERSITY) are negative and significant at the 1% and 5% levels, respectively.…”

Section: Resultssupporting

confidence: 87%

Do capital markets reward corporate climate change actions? Evidence from the cost of debt

et al. 2022

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As a result of recurring natural disasters caused by climate change, firms are under enormous pressure to reconsider their environmental footprints. However, whether or not investors reward firms' climate change actions remains a topic of considerable debate. Using a sample of S&P 500 companies over the period 2005-2020, we hypothesise and find a significant negative relationship between climate change actions and the cost of debt, indicating that investors indeed reward corporate climate efforts in the form of lower cost funds. This relationship exists in both environmentally sensitive and non-sensitive industries and remains negative and statistically significant even after controlling for the impact of the ongoing pandemic . The findings are robust to the use of alternative measures for our variables, alternative estimation methods and after controlling for endogeneity issues. We interpret our findings within the decision-usefulness and stakeholder-agency theories that suggest that non-financial information on firms' environmental performance is becoming increasingly important when borrowers' creditworthiness is assessed. Our study offers important regulatory and academic policy implications.

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Section: Resultssupporting

confidence: 87%

Do capital markets reward corporate climate change actions? Evidence from the cost of debt

et al. 2022

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“…On the other hand, CEO`s tenure in Technology Hardware industry seems to positively affect ROE, ROA. This result supports the view of Gunasekarage, Luong, Truong (2019) [47], that CEOs with a longer tenure could form such management structure, which will enhance firm performance.…”

Section: Resultssupporting

confidence: 86%

“…We do believe that in biotechnology companies investors prefer the entrepreneurs and professional managers at the CEO position to the professors heading the research team. However, we found a positive relationship between tenure of CEO and firm performance for Technology Hardware industry (in line with Gunasekarage, Luong, Truong 2019[47]), which contradicts to the result obtained for Pharmaceutical companies. In addition, we found practically no evidence concerning the board independence and ownership structure of innovative firms, that contradicts to the results on the role of independent directors received by Chen et al…”

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confidence: 99%

Does Smart & Powerful CEO Contribute to the Performance of Technology Companies?

Karnoukhova¹,

Stepanova²

2019

КФ

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In recent decades, innovative companies became one of the major drivers of economy worldwide. According to surveys, nearly 70% of the world’s most innovative companies in 2019 are U.S. firms. However, academic studies mostly focused on the influence of the top management team and the board of director’s on the firm performance, on the relationship between innovations and CEO`s preferences. However, we suppose CEO can exert a significant influence on performance of innovative companies. We strive to show which CEO characteristics could lead to higher firm value. Does highly educated CEO contribute more to innovations in hi-tech sphere? Does CEO power matter? Are founders better CEOs than newcomers or professionals for technological companies with their longer horizons and higher risks? This research uses Generalized Least Square model on a sample of 12565 firm-year observations during 2004-2015 period. For this research we used data for three innovative industries: Pharmaceuticals, Biotechnology & Life Sciences, Software & Services and Technology Hardware & Equipment industries. We have hand-collected data from the CVs in CIQ database. Overall, the empirical results reveal that educational background, tenure, duality play crucial roles in explaining firm value. This study contributes to the existing literature in two aspects. First, our findings indicate that CEO characteristics play crucial roles in explaining technology firm value and performance. We demonstrated that founding CEO contributes to technology firm performance as well as the CEO with better education. Second, CEOs should be smart and powerful in order to sustain firm performance. We found that CEOs characteristics could mitigate the conflicts between different types of investors and their influence on firm performance. More specifically, CEOfounder was found to add greatly to the firm performance of Software and Pharmaceutical companies. Furthermore, the influence of CEO seems to mitigate the conflict of interest with independent active institutional investors in Hardware industry. We provided examples to prove the validity of our tests.

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“…Empirical studies argue that product market competition leads to better performance because it serves as a powerful force to solve agency conflicts between owners and managers, which leads to improved firm profitability [68,69]. When referring to some studies conducted in emerging markets, we note that their results are in favor of a positive relationship between product market competition and performance [68,70,71]. Market competition is an organizational strategy that allows a firm to gain competitive advantages and to improve firm performance [60].…”

Section: The Relationship Between Ceo Duality and Firm Performance Wimentioning

confidence: 97%

“…Market competition is an organizational strategy that allows a firm to gain competitive advantages and to improve firm performance [60]. Indeed, previous research has empirically found that market competition is positively related to improved firm performance [68,72,73]. Market competition is an organizational strategy that allows a firm to gain competitive advantages and to improve viable performance [60].…”

Section: The Relationship Between Ceo Duality and Firm Performance Wimentioning

confidence: 99%

The Effects of Market Competition, Capital Structure, and CEO Duality on Firm Performance: A Mediation Analysis by Incorporating the GMM Model Technique

et al. 2020

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This current study is one of the few investigations to conduct a focalized examination of the relationship between CEO duality and firm performance; however, this relationship seems to be imprecise due to the impact of the invention mechanism. This study explores the effect of CEO duality to achieve firm performance through the mediating effects of capital structure and market competition, which is an innovative model. The study incorporated the generalized method of moments (GMM) model to examine the proposed association of the CEO duality and firm performance, and the findings specified a negative relationship between CEO duality and firm performance. The results indicated that capital structure partially mediated the association between CEO duality and firm performance. The results also showed that market competition fully mediated this linkage between CEO duality and firm performance, which in turn specified a significant positive relationship with market competition, which mediated a positive relationship. By incorporating these mediators, the results determined that CEO duality reduces firm performance through the capital structure; however, it enhances firm performance by stimulating market competition.

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Growth and market share matrix, CEO power, and firm performance

Cited by 14 publications

References 50 publications

Do capital markets reward corporate climate change actions? Evidence from the cost of debt

Do capital markets reward corporate climate change actions? Evidence from the cost of debt

Does Smart & Powerful CEO Contribute to the Performance of Technology Companies?

The Effects of Market Competition, Capital Structure, and CEO Duality on Firm Performance: A Mediation Analysis by Incorporating the GMM Model Technique

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