Affiliation:
1. Department of Finance, Faculty of Business and Economics, University of Melbourne, Australia
Abstract
I examine whether changes in CEO status affect risk-related business decisions. I use prestigious awards as shocks to CEO status relative to other CEOs. Firms with award-winning CEOs decrease their idiosyncratic volatility, and their industry betas converge towards one. These firms also reduce their spending on research and development, while increasing investment in fixed assets relative to a matched sample of firms with non-winning CEOs. The evidence suggests that CEOs who reach higher status become more concerned about poor relative performance. By conforming to other firms in their industry, CEOs with the highest reputation can lock-in their relative advantage.
Publisher
World Scientific Pub Co Pte Lt
Subject
Strategy and Management,Economics and Econometrics,Finance
Cited by
16 articles.
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