CEO ability, pay, and firm performance

Accounting and Finance

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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CEO ability, pay, and firm performance. / Chang, Yuk Ying; Dasgupta, Sudipto; Hilary, Gilles.
In: Management Science, Vol. 56, No. 10, 10.10.2010, p. 1633-1652.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Chang, YY, Dasgupta, S & Hilary, G 2010, 'CEO ability, pay, and firm performance', Management Science, vol. 56, no. 10, pp. 1633-1652. https://doi.org/10.1287/mnsc.1100.1205

APA

Chang, Y. Y., Dasgupta, S., & Hilary, G. (2010). CEO ability, pay, and firm performance. Management Science, 56(10), 1633-1652. https://doi.org/10.1287/mnsc.1100.1205

Vancouver

Chang YY, Dasgupta S, Hilary G. CEO ability, pay, and firm performance. Management Science. 2010 Oct 10;56(10):1633-1652. Epub 2010 Aug 20. doi: 10.1287/mnsc.1100.1205

Author

Chang, Yuk Ying ; Dasgupta, Sudipto ; Hilary, Gilles. / CEO ability, pay, and firm performance. In: Management Science. 2010 ; Vol. 56, No. 10. pp. 1633-1652.

Bibtex

@article{a513bc4a46af4a6196e4f7b4e34cfb04,

title = "CEO ability, pay, and firm performance",

abstract = "Do chief executive officers (CEOs) really matter? Do cross-sectional differences in firm performance and CEO pay reflect differences in CEO ability? Examining CEO departures over 1992–2002, we first find that the stock price reaction upon departure is negatively related to the firm's prior performance and to the CEO's prior pay. Second, the CEO's subsequent labor market success is greater if the firm's predeparture performance is better, the prior pay is higher, and the stock market's reaction is more negative. Finally, better prior performance, higher prior pay, and a more negative stock market reaction are associated with worse postdeparture firm performance. Collectively, these results reject the view that differences in firm performance stem entirely from non-CEO factors such as the firms' assets, other employees, or “luck,” and that CEO pay is unrelated to the CEO's contribution to firm value.",

keywords = "CEO ability, CEO pay, managerial labor market;, firm performance",

author = "Chang, {Yuk Ying} and Sudipto Dasgupta and Gilles Hilary",

year = "2010",

month = oct,

day = "10",

doi = "10.1287/mnsc.1100.1205",

language = "English",

volume = "56",

pages = "1633--1652",

journal = "Management Science",

issn = "0025-1909",

publisher = "INFORMS Inst.for Operations Res.and the Management Sciences",

number = "10",

}

RIS

TY - JOUR

T1 - CEO ability, pay, and firm performance

AU - Chang, Yuk Ying

AU - Dasgupta, Sudipto

AU - Hilary, Gilles

PY - 2010/10/10

Y1 - 2010/10/10

N2 - Do chief executive officers (CEOs) really matter? Do cross-sectional differences in firm performance and CEO pay reflect differences in CEO ability? Examining CEO departures over 1992–2002, we first find that the stock price reaction upon departure is negatively related to the firm's prior performance and to the CEO's prior pay. Second, the CEO's subsequent labor market success is greater if the firm's predeparture performance is better, the prior pay is higher, and the stock market's reaction is more negative. Finally, better prior performance, higher prior pay, and a more negative stock market reaction are associated with worse postdeparture firm performance. Collectively, these results reject the view that differences in firm performance stem entirely from non-CEO factors such as the firms' assets, other employees, or “luck,” and that CEO pay is unrelated to the CEO's contribution to firm value.

AB - Do chief executive officers (CEOs) really matter? Do cross-sectional differences in firm performance and CEO pay reflect differences in CEO ability? Examining CEO departures over 1992–2002, we first find that the stock price reaction upon departure is negatively related to the firm's prior performance and to the CEO's prior pay. Second, the CEO's subsequent labor market success is greater if the firm's predeparture performance is better, the prior pay is higher, and the stock market's reaction is more negative. Finally, better prior performance, higher prior pay, and a more negative stock market reaction are associated with worse postdeparture firm performance. Collectively, these results reject the view that differences in firm performance stem entirely from non-CEO factors such as the firms' assets, other employees, or “luck,” and that CEO pay is unrelated to the CEO's contribution to firm value.

KW - CEO ability

KW - CEO pay

KW - managerial labor market;

KW - firm performance

U2 - 10.1287/mnsc.1100.1205

DO - 10.1287/mnsc.1100.1205

M3 - Journal article

VL - 56

SP - 1633

EP - 1652

JO - Management Science

JF - Management Science

SN - 0025-1909

IS - 10

ER -

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