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

Md Reiazul Haque; Bobae Choi; Doowon Lee; Sue Wright

doi:10.1016/j.frl.2021.102609

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

Md Reiazul Haque, Bobae Choi, Doowon Lee, Sue Wright

A&F Accounting & Finance

Research output: Contribution to journal › Article › peer-review

Abstract

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.

Original language	English
Article number	102609
Journal	Finance Research Letters
DOIs	https://doi.org/10.1016/j.frl.2021.102609
Publication status	Published - 3 Dec 2021

Access to Document

10.1016/j.frl.2021.102609

Cite this

@article{d0efe35d611e47ca96697dd37fefa658,

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

abstract = "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.",

author = "Haque, {Md Reiazul} and Bobae Choi and Doowon Lee and Sue Wright",

year = "2021",

month = dec,

day = "3",

doi = "10.1016/j.frl.2021.102609",

language = "English",

journal = "Finance Research Letters",

issn = "1544-6123",

publisher = "Elsevier BV",

}

TY - JOUR

T1 - Insider vs. outsider CEO and firm performance: Evidence from the Covid-19 pandemic

AU - Haque, Md Reiazul

AU - Choi, Bobae

AU - Lee, Doowon

AU - Wright, Sue

PY - 2021/12/3

Y1 - 2021/12/3

N2 - 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.

AB - 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.

U2 - 10.1016/j.frl.2021.102609

DO - 10.1016/j.frl.2021.102609

M3 - Article

SN - 1544-6123

JO - Finance Research Letters

JF - Finance Research Letters

M1 - 102609

ER -

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

Abstract

Access to Document

Fingerprint

Cite this