Insider vs. outsider CEO and firm performance: Evidence from the Covid-19 pandemic

We examine the connection between firm performance and a CEO's previous position (inside or outside the firm), using Covid-19 as an exogenous shock. Firms led by insider CEOs outperformed those led by outsider CEOs in terms of return on assets during the Covid-19 crisis period in 2020, but ther...

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Detalles Bibliográficos
Autores principales: Haque, Md Reiazul, Choi, Bobae, Lee, Doowon, Wright, Sue
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Elsevier Inc. 2022
Materias:
Article
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9167990/
https://www.ncbi.nlm.nih.gov/pubmed/35692563
http://dx.doi.org/10.1016/j.frl.2021.102609
Descripción
Sumario:We examine the connection between firm performance and a CEO's previous position (inside or outside the firm), using Covid-19 as an exogenous shock. Firms led by insider CEOs outperformed those led by outsider CEOs in terms of return on assets during the Covid-19 crisis period in 2020, but there was no performance differential in the period before the crisis. Additional tests indicate that outperformance under insider CEOs is observed in firms holding more cash and firms with a higher proportion of internally promoted non-CEO executives. These findings have important implications for boards of directors making CEO appointments.

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