Does the CEO effect differ in times of crisis? Evidence from US and China during the global financial crisis

Ingo Kleindienst, Moustafa Haj Youssef, Mostafa Harakeh, Mei Yu

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)
19 Downloads (Pure)

Abstract

This study investigates short-term fluctuations in the CEO effect, measured as the proportion of variance in firm performance attributable to individual CEOs, in response to macroeconomic crises, with a specific focus on the global financial crisis. Utilizing multilevel modeling on a 15-year dataset of US firms and assessing three performance metrics, we identify a significant decline (increase) in the CEO effect on accounting-based (market-based) performance measures (measure) from the pre-crisis to the crisis period, followed by a significant rebound post-crisis. We replicate the analysis using a sample of Chinese firms and find a consistent pattern. Our research advances the CEO effect literature by emphasizing the dynamic nature of the CEO effect in an international context. Our findings highlight that the CEO effect is not static but can undergo short-term fluctuations due to significant changes in the macroeconomic environment.

Original languageEnglish
Article number114807
Number of pages13
JournalJournal of Business Research
Volume182
Early online date3 Jul 2024
DOIs
Publication statusPublished - Sept 2024

Bibliographical note

Publisher Copyright:
© 2024

Funder

This research was supported by the Aarhus University Research Foundation (grant no: AUFF-E-2015-FLS-8-60)

Funding

We thank Timothy Quigley, Annamaria Georgieva, Jakob Arnoldi, and Eliane Choquette for their valuable comments on earlier drafts of this manuscript. This research was supported by the Aarhus University Research Foundation (grant no: AUFF-E-2015 - FLS -8-60)

FundersFunder number
Aarhus Universitets ForskningsfondAUFF-E-2015 - FLS -8-60

    Keywords

    • CEO effect
    • Financial crisis
    • Firm performance
    • Managerial discretion
    • Multilevel modeling

    ASJC Scopus subject areas

    • Marketing

    Fingerprint

    Dive into the research topics of 'Does the CEO effect differ in times of crisis? Evidence from US and China during the global financial crisis'. Together they form a unique fingerprint.

    Cite this