Business Management Tutor (APA, NO PLAGARISM, GREAT WORK, ON TIME)

CEO_power_and_corporate_strate.pdf

Home >Business & Finance homework help >Management homework help >Business Management Tutor (APA, NO PLAGARISM, GREAT WORK, ON TIME)

Vol.:(0123456789)

Review of Quantitative Finance and Accounting (2024) 62:1069–1143 https://doi.org/10.1007/s11156-023-01231-7

1 3

ORIGINAL RESEARCH

CEO power and corporate strategies: a review of the literature

Sanjukta Brahma1 · Fotini Economou2

Accepted: 12 November 2023 / Published online: 11 December 2023 © The Author(s) 2023

Abstract In recent years, the impact of chief executive officers (CEOs) power on corporate strategies has attracted significant public debate in the academic milieu. In this study, we comprehen- sively review the academic literature on CEO power in relation to different corporate poli- cies. We conduct a comprehensive review by dividing the literature into four streams: CEO power and firm performance, CEO power and executive compensation, CEO power and firm risk-taking, and finally, CEO power on other corporate strategies. Our review shows that the findings are mixed in relation to the effects of CEO power on firm strategies. Over- all, the negative impact of CEO power on firm performance is attributed to agency theory, where CEOs pursue their own vested interests, thereby leading to weak corporate govern- ance. The review reveals that the positive impact of CEO power on corporate outcomes is due to effective board monitoring, a powerful board, and high market competition. Our study also shows that most of the studies have adopted Finkelstein’s (1992) four sources of CEO power but have taken different proxies to measure these powers. We have also identi- fied several gaps in the current studies and recommend avenues for further research.

Keywords CEO power · Firm performance · Firm risk-taking · Executive compensation · Corporate governance

JEL Classification D21 · D22 · G3 · G32 · G34 · M12 · M52

* Sanjukta Brahma [email protected]

Fotini Economou [email protected]

1 Glasgow School for Business and Society, Glasgow Caledonian University, Glasgow G4 0BA, Scotland

2 Centre of Planning and Economic Research, Athens, Greece and Open University of Cyprus, Nicosia, Cyprus

http://orcid.org/0000-0002-0372-9644

http://crossmark.crossref.org/dialog/?doi=10.1007/s11156-023-01231-7&domain=pdf

1070 S. Brahma, F. Economou

1 3

1 Introduction

Power is defined as the “capacity of individual actors to exert their will” (Finkelstein 1992, p. 506). CEOs are deemed to be the chief organizers and designers of an organi- zation’s long-term strategy, and their position is considered a source of power (Sheikh 2019a). Management scholars unanimously support that CEOs are the most powerful players in every organization. However, corporate governance literature is divided on the consequences of CEO power on corporate governance. One strand of literature is grounded in the agency theory and maintains that CEOs are risk averse, self-serving, and pursue policies that render their own personal goals (Combs et al. 2007; Bebchuk and Fried 2003; Bigley and Wiersema 2002). These studies support the view that con- ferring power to CEOs could lead to managerial entrenchment and poor corporate governance (Bebchuk et al. 2011). Adams et al. (2005) assert that powerful CEOs are overconfident, which could lead them to make costly strategic mistakes. This strand of literature shows that CEO power is detrimental to firm performance. The other strand of literature argues that CEOs are the most powerful members of a business (Daily and Johnson 1997; Jaroenjitrkam et al. 2020) and they “set the tone for the entire corpora- tion” (Wheelen and Hunger 1990, p. 69). CEO power could also alleviate information asymmetry costs and improve operational efficiency. Some studies advance that even though the corporate board might play a dominant role during a corporate crisis, in normal times, the board plays a passive role, and the decision-making power rests on the CEOs (Elhagrasey et al. 1999). Social psychology theory specifies that powerful CEOs are more optimistic about corporate strategies (Anderson and Galinsky 2006). CEO power could improve operational efficiency, remove information asymmetry, enhance bargaining power, increase firm value through CSR practices, and increase firm value by managing organizational capital (Ahsan et al. 2022; Chiu et al. 2022; Graham et al. 2020). Given the importance of powerful CEOs in defining corporate strategies, a review of empirical evidence on CEO power and corporate governance outcome is war- ranted. This study addresses this gap by reviewing the literature on CEO power and firm strategies.

This topic is of interest for two main reasons. First, in recent years there has been increased attention from regulatory bodies and investors towards the composition of cor- porate boards. This is because CEO power is an essential aspect of board dynamism, as weak CEOs with powerful boards could lead to excessive monitoring that could constrain firm performance and risk-taking. On the other hand, powerful CEOs could also lead to entrenched boards. Hence this review highlights the theories and empirical evidence on CEO power that would have significant policy implications for corporate boards and regu- latory bodies. Second, in the last few years, there has been a steady increase in research papers on CEO power in Finance, Management, Economics, and Accounting journals. In the last five years alone, we have found 61 research papers on CEO power. This increased attention on CEO power literature could be attributed to the powerful dynamics played by the CEOs on the corporate boards. In addition, research databases like Boardex have made it possible to readily obtain data on CEO characteristics like CEO pay, CEO share owner- ship, CEO educational background, CEO age, network size, and others. This valuable data on CEO characteristics has opened new avenues for research on CEO power and thus led to a plethora of studies on CEO power. This rising tide of empirical research on CEO power calls for a thorough review of the literature in this area. Hence, in this study, we aim to comprehensively review all the theoretical and empirical research on CEO power.

1071CEO power and corporate strategies: a review of the literature

1 3

In his seminal paper, Finkelstein (1992) classifies four types of CEO power. These are structural power, ownership power, expert power, and prestige power. Extant studies have used different variants of these four sources of power. The most popular indica- tors of CEO power are CEO duality (structural), CEO tenure (expert), CEO stock own- ership (ownership), CEO founder (ownership), CEO pay slice (structural), CEO net- work or directors in other organizations (prestige), CEO education (prestige), and CEO triality or plurality (structural). Pfeffer and Salancik (1978) contend that CEO power could emanate from several formal and informal sources, and hence, the four sources named by Finkelstein (1992) may not be unequivocal. In this study, we have found and reviewed 131 papers from 1995 to 2023 to study powerful CEOs’ influence on different corporate strategies. Figure 1 shows the distribution of studies across different subject areas. As shown in Fig. 1, the most popular studies on CEO power are published in the field of Finance (59), followed by General Management, Ethics and Social Responsi- bility (34), Economics (11), Accounting (10), Strategy (9), International Business and Area Studies (3), Social Science (2) and the rest of the fields have less than two studies on CEO power. We divide these studies into four different streams.

Stream 1: This stream reviews the studies associated with CEO power and firm per- formance. A review of studies on CEO power and firm performance shows mixed evi- dence. For instance, several studies report that CEO tenure (Simsek 2007; Tien et al. 2013; Ting et al. 2017), CEO duality (Chiu et al. 2021), and founder CEOs (Adams et al. 2005; Fahlenbrach 2009) improve firm performance. Some studies describe that CEO tenure (Veprauskaite and Adams 2013) and CEO duality (Duru et al. 2016; Tien et al. 2013; Veprauskaitė and Adams 2013) adversely affect firm performance. Oth- ers report that CEO power improves firm outcomes in the mature stage of firms’ life cycle (Harjoto and Jo 2009), low to moderate strategic change (Zhang and Rajagopalan 2010), with powerful boards (Tang et al. 2011), only in markets with high competi- tion (Sheikh 2018b), earnings management (Le et al. 2022), and CEO self-discipline in power (Tang 2021). Few studies document that CEO power reduces firm performance (Bebchuk et al. 2011; Cormier et al. 2016; Haynes et al. 2019; Park et al. 2018; Colak

Fig. 1 Distribution of studies across different journal fields

1072 S. Brahma, F. Economou

1 3

and Liljeblom 2022). Daily and Johnson (1997) report mixed evidence of CEO power on firm performance.

Stream 2: Several studies sought to understand whether CEO power could influence executive compensation. A review of studies on CEO power and CEO compensation also shows mixed results. Some studies report that CEO power positively affects compensa- tion (Choe et al. 2014; Elhagrasey et al. 1999; Hill et al. 2016; Luo 2015; Tian and Yang 2014), while others report negative consequence of CEO power on compensation (Zhu et al. 2021). Other studies on CEO power and compensation find that financial markets assist CEOs in earning higher compensation through stock options (Boyer 2005), powerful CEOs reprice executive stock options (Pollock et al. 2002), or adopt performance-vested stock options (PVSO) (Abernethy et al. 2015).

Stream 3: Several studies examine whether CEO power affects corporate risk-taking. The majority of papers report that CEO power has a favorable outcome on firm risk-taking (Altunbas et al. 2020; Chintrakarn et al. 2015; Korkeamäki et al. 2017; Lewellyn and Mul- ler-Kahle 2012; Sheikh 2019b). Other studies report that CEO power positively impacts bank risk (Pour et al. 2023; Shabir et al. 2023). Few studies find that CEO power adversely impacts firm risk-taking (Haider and Fang 2018; Pathan 2009; Tan and Liu 2016), and CEO power strengthens the negative impact of ESG disclosure on firm risk-taking (Menla Ali et al. 2023; Zhao et al. 2023). Chintrakarn et al. (2015) find that the relation between CEO power and firm risk-taking is non-monotonic, while Zou et al. (2021) show that CEO formal power (informal power) has a positive (negative) effect on firm risk.

Stream 4: We have reviewed all the other studies on CEO power and corporate strategies in this category. The review shows that higher CEO power helps firms in the internationali- zation process (Sanders and Carpenter 1998), focuses on the same line of business (Bigley and Wiersema 2002), reduces audit committee effectiveness (Lisic et al. 2016), impedes the hiring of accounting experts in audit committee (Kim et al. 2017), brings unity of com- mand in smaller boards (Dowell et al. 2011). CEO power also leads to hiring of directors with similar demography (Westphal and Zajac 1995; Zajac and Westphal 1996a, b), hiring fewer independent directors and tend to nominate monitor heavy boards (Baldenius et al. 2014), laying off senior non-executives who have lengthier tenure than the CEOs (Zhang et al. 2011), and powerful incumbent CEOs thwart the CEO-Chair dual roles of incoming CEOs (Horner and Valenti 2012). Several studies find that CEO power leads to lower bid premiums for acquisitions (Fralich and Papadopoulos 2008), more focused mergers gener- ating higher returns (Fahlenbrach 2009), superior information of target firms during merg- ers (Balmaceda 2009), higher propensity to complete takeover deals (Chikh and Filbien 2011), higher bond yield (Liu and Jiraporn 2010), and lower dividend payout (Onali et al. 2016). Studies also report that CEO power improves firm innovation (Sariol and Abebe 2017; Sheikh 2018a), negatively affect corporate social responsibility (CSR) (Muttakin et al. 2018; Sheikh 2019a), positively impact CSR (Pucheta-Martínez and Gallego-Álvarez 2021). CEO power is increased by board gender diversity (Usman et al. 2018; Brodmann et al. 2022) and reduced by increased product market competition (Jaroenjitrkam et al. 2020).

This paper makes several important contributions. First, this study identifies and pre- sents all the different measures of CEO power. Second, this literature review has helped to distinguish all the theories about CEO power, and we have ascertained the empirical stud- ies that supported or refuted them. Third, this review has helped to recognize the methodo- logical challenges faced in CEO power research and how empirical studies have addressed those challenges. Finally, this review also presents the key research areas in CEO power and has categorized the studies into various streams, as mentioned earlier. To the best of

1073CEO power and corporate strategies: a review of the literature

1 3

our knowledge, this is the first comprehensive review of CEO power and corporate strate- gies. The rest of the paper is structured as follows. Section 2 reviews different measures of CEO power adopted by extant studies. Section 3 presents the theories related to CEO power literature. Section 4 presents the methodology adopted by the empirical studies. Sections 5, 6, 7, 8 review the literature categorized under streams 1, 2, 3, and 4, respec- tively. Finally, Sect. 9 concludes.

2 Indicators and theories of CEO power

In this section, we discuss the various measures of CEO power, starting with the four areas originally identified by Finkelstein (1992) and followed by other measures of CEO power.

2.1 Structural power

CEOs’ structural power emanates from their formal organizational composition and hier- archical command through exercising their legislative rights (Finkelstein 1992; Finkelstein and D’aveni 1994). Most empirical studies have recognized CEO-Chair duality (see Daily and Johnson 1997; Deboskey et al. 2019; Haynes and Hillman 2010; Joseph et al. 2014; Korkeamäki et al. 2017) as the measure of structural power. This is measured as a dummy variable 1 if the CEO is also the board chair. From the organization perspective, CEO- Chair duality brings unity of command through unequivocal and explicit power over the company and proclaiming a definite line of influence (Finkelstein and D’Aveni 1994). Stud- ies on strategy development suggest that organizations spearheaded by formidable leaders can provide strategic directions that can be possible when the same individual is both the CEO and the Chair of the board.

Finkelstein and D’Aveni (1994) argue that vigilant boards characterized by greater independent directors tend to support nonduality as they perceive that duality weakens the supervising mechanism of the board. Fralich and Papadopoulos (2018) document that CEO-Chair duality exerts its power over the board through information asymmetry, thereby preventing the board from making informed decisions. Finkelstein and D’Aveni (1994) report that CEO-Chair duality impedes the board’s power to successfully supervise and control the board’s agenda and directs the board’s focus to fulfill the CEO’s agenda.

A second indicator of CEO structural power pioneered by Bebchuk et al. (2009) and later by Bebchuk et al. (2011) is the CEO pay slice (CPS). This is taken as the ratio of CEO compensation to the total compensation of the top five executives on the board. Bebchuk et al. (2011) assert that CPS is a more objective measure as it accounts for different attrib- utes of the CEO concerning its skills, influence, or power. In addition, CPS indicates the CEO’s power relative to other board members. Sheikh (2018a) measures CPS as a dummy variable 1 if the firm’s CPS is higher than the industry median CPS and 0 otherwise. CPS as a proxy of structural CEO power has been subsequently expended by several studies (see Jiraporn et al. 2012; Li et al. 2016; Liu and Jiraporn 2010; Ntim et al. 2019; Shahab et al. 2020; Sheikh 2019a, 2019b, 2018a, 2018b; Tian and Yang 2014; Usman et al. 2018). Zagonov and Salganik-Shoshan (2018) examine the validity of CPS as an effective meas- ure of CEO power. They advance that CPS wrongly estimates CEO power as it does not control the allocation of pay amongst the top five executives. This is because CPS over- looks the vital evidence enclosed in the compensation data of top executives.

1074 S. Brahma, F. Economou

1 3

Few studies have also used CEO triality as a measure of structural power. This is a dummy variable of 1 if the same individual is the CEO, the Chair, and the firm’s Presi- dent (see Adams et al. 2005; Han et al. 2016; Sheikh 2018a, 2018b, 2019a). Harjoto and Jo (2009) has used CEO plurality by taking a categorial variable with value 1 to capture CEO-Chair duality and triality. Tang et al. (2011) and Tang and Crossan (2017) have taken a similar measure that they coined as “percentage of higher titles”. They have applied a reverse coded indicator variable coded as zero implying lower CEO power if the top management team (TMT) has an executive vice president (VP), senior VP, and two VPs.

Several studies have taken board independence to gauge structural power (Abernethy et al. 2015; Choe et al. 2014; Gunasekarage et al. 2020; Han et al. 2016; Kalyta 2009; Kalyta and Magnan 2008; Sheikh 2018b; Zhu et al. 2021). The strength of independent directors to monitor the board is adversely affected by CEO power; hence a powerful CEO leads to a less diligent board (Sheikh 2018b). On the contrary, Abernethy et al. (2015) and Gunasekarage et al. (2020) assert that independent directors would also have fewer disagreements with the CEO due to their prior detachment from firms’ decision-making. Board independence is evaluated by taking the proportion of unrelated directors (Kalyta and Magnan 2008), outside directors (Coles et al. 2001; Kalyta 2009), the proportion of executive directors on the board (Choe et al. 2014), the proportion of independent direc- tors (Abernethy et al. 2015; Gunasekarage et al. 2020), and dependent directors (Han et al. 2016). Sheikh (2018b) has adopted an indicator variable as 1 if the proportion of independ- ent directors is below the median proportion of independent directors.

Several studies have also implemented CEO compensation to measure structural power. Higher CEO compensation indicates that the CEO could influence the board (Bigley and Wiersema 2002; Daily and Johnson 1997; Finkelstein 1992; Westphal and Zajac 1995). Pay differential between the CEOs and other board members indicates CEOs exerting power over top managers (Bigley and Wiersema 2002). Agency theory envisages that powerful CEOs could persuade the remuneration committee to settle substantial compensation not tied to financial performance (Veprauskaitė and Adams 2013). Different studies have used variants of CEOs’ compensation. CEO compensation is measured as CEOs’ total compen- sation out of the total cash compensation of the next highest-paid officer in the firm (Bigley and Wiersema 2002; Daily and Johnson 1997; Gunasekarage et al. 2020; Lisic et al. 2016); annual total compensation (cash, salary, and bonuses) (Fang et al. 2020; Tang et al. 2011; Tang and Crossan 2017; Veprauskaitė and Adams 2013); average CEO cash compensation by average TMT cash compensation (Abebe et al. 2011).

CEO being the only insider has been taken to evaluate structural power by few studies (Adams et al. 2005; Chiu et al. 2021; Ting 2013), while Lewellyn and Fainshmidt (2017) recognize this measure as a prestige power as it bestows heightened status. Agency the- ory perceives that the CEO being the only insider will reduce CEO power as this would increase board independence and, thereby, effective board monitoring (Adams et al. 2005; Lewellyn and Fainshmidt 2017). On the other hand, insider CEOs have higher knowledge capital (Chiu et al. 2021), and as the only insider, the CEO would have the power to curb information shared with other directors (Adams et al. 2005; Lewellyn and Fainshmidt 2017). A dummy variable of value 1 captures this if the CEO is an insider and zero other- wise (Adams et al. 2005; Chiu et al. 2021; Ting 2013).

Other structural CEO powers used by a few studies are the CEO pay gap (Jaroenjitrkam et al. 2020; Sheikh 2019a, 2018b; Li 2016) and performance-related bonuses (Veprauskaitė and Adams 2013). The CEO pay gap is the difference between CEO’s total compensa- tion and second highest director’s compensation over CEO’s total compensation (Li 2016).

1075CEO power and corporate strategies: a review of the literature

1 3

CEO bonus pay is determined by a categorical variable 1 if the CEO gets a performance- related bonus and zero otherwise.

2.2 Ownership power

Finkelstein (1992) observes that ownership grants CEOs to implement higher authority to make strategic decisions. The two most popular ownership power measures adopted by extant studies are CEO stock ownership and the CEO as the firm’s founder. Stock owner- ship has been recognized as a vital measure of upper-echelon power (Bigley and Wiersema 2002; Daily and Johnson 1997; Finkelstein 1992). Morck et al. (1988) document that CEO stock ownership would increase their voting rights, which could give them substantial con- trol in director nomination. Ownership over 5 percent could lead to CEO entrenchment (Morck et al. 1988) and could guard them against internal monitoring mechanisms. A higher ownership stake could also give CEOs legitimate rights to decide on firms’ invest- ment policies (Dowell et al. 2011), and increased CEO stock ownership could diminish the chances of involuntary turnover (Sheikh 2019a). CEO stock ownership is proxied by the percentage of stocks obtained by CEOs. Haynes and Hillman (2010) have taken a slightly different measure of ownership power: the proportion of CEOs to board equity holdings.

The second measure of ownership power that many studies have used is founder-CEO or CEO from the founding family. Founder-CEO maintains a level of formal power (equity ownership) and informal power (founder or relative of founder) that allows proclaiming strategic changes within the firm (Buyl et al. 2011; Daily and Johnson 1997; Dowell et al. 2011; Sheikh 2018a). Fahlenbrach (2009) observes that founder CEOs lower agency costs because they consider the firm as their life’s work and are driven to maximize its value. CEO founder or from the founding family possess substantial authority over the business’s strategy, culture, and aspirations (Le et al. 2022). Founder CEOs are perceived as internally hired and have a different type of motivation than other CEOs (Adams et al. 2005), have substantial sway on the board of directors (Sheikh 2018a; Walls and Berrone 2017), are unlikely to be removed from their position and may have a different perception of risk than other CEOs (Fahlenbrach 2009). Several studies have used categorical variable, one for founder CEOs and zero otherwise (Abebe et al. 2011; Adams et al. 2005; Buyl et al. 2011; Cormier et al. 2016). Cormier et al. (2016) and Jaroenjitrkam et al. (2020) adopt a different version of the founder CEO measure: the CEO’s family owns more than a 5% share. Daily and Johnson (1997) have also used a CEO with the same last name as the third category of founder measure in addition to the above two.

A third measure of ownership power that has been used by a few studies is institutional ownership (Abernethy et al. 2015). Outside investors with significant stock ownership are expected to retrieve internal and external firm information, tend not to be influenced by the board of directors and enable the transfer of power from management to the sharehold- ers (Lewellyn and Muller-Kahle 2012). Higher institutional ownership implies higher vot- ing rights to nominate board members and greater supervision of executive compensation (Lewellyn and Muller-Kahle 2012) and, thereby, a more rigorous inspection of managers’ power (Haider and Fang 2018). This is the percentage of shares obtained by an individ- ual other than the CEO (Abernethy et al. 2015; Lewellyn and Muller-Kahle 2012; Pollock et al. 2002).

Other measures of ownership power that few studies have used are outside stock own- ership (Kalyta 2009; Kalyta and Magnan 2008) or top outsider ownership (Lewellyn and

1076 S. Brahma, F. Economou

1 3

Muller-Kahle 2012); CEO blockholders1 (Kalyta 2009; Kalyta and Magnan 2008); high CEO ownership2 (Jaroenjitrkam et al. 2020). Increased ownership of outside directors would make them more watchful of CEOs’ behaviors. Outside directors are also expected to possess superior internal and external information. Therefore, they are unlikely to be swayed by the CEO (Lewellyn and Muller-Kahle 2012) and would have higher voting rights (Finkelstein and D’Aveni 1994). Chen (2014) has taken this as the ratio of shares owned by the CEO to outside directors.

2.3 Expert power

CEO’s ability to tackle business contingencies increases with their time on the board as they can develop more excellent contacts and relationships with different stakeholders (Finkelstein 1992). CEOs are also likely to amass social capital and knowledge with longer tenure, which could be a source of informal power (Finkelstein and D’aveni 1994; Greve and Mitsuhashi 2007). Increased tenure would lead CEOs to have greater knowledge of company information, and they could limit the board’s accessibility of this information (Daily and Johnson 1997; Combs et al. 2007). Simsek (2007) also observes that increased CEO tenure could lead to increased social gathering with directors, other firm managers, and constituents that brings legitimacy to engage in risky ventures. CEO tenure could also alleviate board monitoring (Graham et al. 2020; Ryan and Wiggins 2004) and heighten managerial entrenchment leading to divergence of corporate resources (Sheikh 2019a). Most studies that have used CEO tenure to gauge CEO expert power have measured it in terms of the CEO length (in years) in the post (see Abernethy et al. 2015; Buyl et al. 2011; Chiu et al. 2021; Fang et al. 2020; Gunasekarage et al. 2020; Park et al. 2018). In contrast, Han et al. (2016) and Sheikh (2018a) use a dummy variable of value 1 if the CEO tenure is more than the industry median or CEO tenure is more than the median tenure of the whole sample (Mollah and Liljeblom 2016). Huang and Gao (2022) have considered CEO tenure as structural power.

Expert power could emanate from in-depth knowledge and familiarity with the sali- ent elements of the firm (Finkelstein 1992). Few studies have used the number of years worked in the firm in different roles (Finkelstein and D’aveni 1994; Daily and Johnson 1997; Fralich and Papadopoulos 2018; Kalyta 2009; Kalyta and Magnan 2008) or number of years worked in the board (Walls and Berrone 2017) or CEOs’ holding executive posi- tions (Gunasekarage et al. 2020) or CEOs’ holding roles in board committees (Abernethy et al. 2015) as measures of expert power. They assert that when CEOs serve the board in other roles, they have a stronger bond with the board to control and mobilize resources. Le et al. (2022) affirm that CEOs with financial expertise can manage earnings and have taken a categorical variable as 1 if the CEO has financial expertise and zero otherwise. Zhang and Rajagopalan (2010) adopt different categories3 of functional background to capture

2 This is calculated using a dummy variable one if the CEO owns 20% or more of the firm’s shares, and zero otherwise. 3 This study categorises the functional background into ‘throughout’ and ‘non-throughout’ backgrounds. Throughout functional background refers to CEOs in production, process R&D, operations, and accounting while non-throughout functional background refers to CEOs in merchandising, marketing, finance, R&D, and law.

1 This is calculated using a dummy variable one if the outside shareholders own at least 10% of the shares outstanding, and zero otherwise.

1077CEO power and corporate strategies: a review of the literature

1 3

expert power. Kalyta and Magnan (2008) use the unrelated director’s tenure as another measure of CEO power, while Haider and Fang (2018) take CEO professional certificates as a measure of expert power. Finkelstein and D’aveni (1994) have taken another measure of expert power to represent CEOs’ unique skills and expertise, and this is measured as the difference between the functional backgrounds of the TMT and the CEO weighted by the size of the board.

Buyl et al. (2011) identify two more sources of expert power: CEO generalist and CEO as a marketing specialist. Generalist CEOs are likely to have shared perception and trust with the TMT, and CEOs as marketing specialists are particularly useful for sectors with frequent product innovation. These are used as categorical variables. Lewellyn and Muller- Kahle (2012) use another measure of CEO expert power: outside directors’ tenure. This study affirms that the long tenure of outside directors would give them enhanced informa- tion about the firm, and so they can have a better assessment of CEO decisions. This is evaluated by the number of years each outside director was a board member.

2.4 Prestige powers

CEO prestige is an informal power that emanates from the institutional environment and the CEO’s interaction with individuals in other organizations holding similar author- ity (Finkelstein 1992; Finkelstein and D’Aveni 1994). Lewellyn and Muller-Kahle (2012) advance that CEOs with prestige power will face less scrutiny from outside directors as their prestige power will measure their successful leadership. Most extant studies have measured CEO prestige power by taking the number of directors’ positions held by the CEO in other organizations (see Abebe et al. 2011; Altunbas et al. 2020; Bigley and Wiersema 2002; Daily and Johnson 1997; Finkelstein and D’Aveni 1994; Fralich and Papa- dopoulos 2018; Gunasekarage et al. 2020; Haynes et al. 2019; Lewellyn and Muller-Kahle 2012; Ting 2013) or as a dichotomous variable (Haider and Fang 2018). Fralich and Papa- dopoulos (2018) and Lewellyn and Fainshmidt (2017) have taken another indicator of pres- tige power: the number of non-profit board directorships. Fralich and Papadopoulos (2018) use a third measure, the relative prestige of the firm where the CEO holds office. This is possibly because outside directorship is viewed as CEO’s networking ties and embed- dedness within the business elites (Lewellyn and Muller-Kahle 2012). CEOs could expand their network through their outside directorship, allowing them to gain access to strategic information and hence reduce asymmetric information (Fralich and Papadopoulos 2018). Finkelstien and D’Adeni (1994) assert that CEO prestige power could increase entrench- ment leading to centralized structures like CEO duality. Increased CEO prestige power could lead vigilant boards to appoint an independent chairperson to counter or balance the supremacy of the CEO.

Another source of prestige power is CEO’s attendance in prestigious or elite universities for their undergraduate and postgraduate degrees. Some studies have taken this as a cate- gorical variable (Finketsien and D’aveni 1994; Bigley and Wiersema 2002; Chikh and Fil- bien 2011; Daily and Johnson 1997; Dowell et al. 2011; Fang et al. 2020; Haider and Fang 2018; Ting et al. 2017; Zhang and Rajagopalam 2010; Zhu et al. 2021) or as the number of elite universities the CEO has attended (Gunasekarage et al. 2020; Haynes et al. 2019) or if CEO’s qualification is more than the median qualification (Mollah and Liljeblom 2016).

Several extant studies have also taken CEO age as a gauge of prestige power since, with age, CEOs are likely to gather more skill and knowledge (Haider and Fang 2018; Mollah

1078 S. Brahma, F. Economou

1 3

and Liljeblom 2016; Ntim et al. 2019; Zhang and Rajagopalam 2010). Haider and Fang (2018) consider CEO age and gender as CEO demographic power.

2.5 Other measures of CEO power

Kalyta and Magnan (2008) and Abernethy et al. (2015) have taken board size to measure CEO power, as large boards could lead to a fall in the board’s efficiency in controlling CEO power. Other determinants of CEO power are CEO acquisition experience (Chikh and Filbien 2011); CEO unforced turnover (Onali et al. 2016); ownership concentration (Abernethy et al. 2015); CEO reputation (Ntim et al. 2019); political connection (Zhu et al. 2021); CEO is CFO (Tan and Liu 2016); staggered board (Pollock et al. 2002); CEO dual- ity and nomination committee and CEO plurality (chair and nomination committee) (Har- joto and Jo 2009).

3 Summary of CEO power indicators

From the literature review under different streams, as shown in Tables 3, 4, 5, 6, most stud- ies have used the four dimensions of CEO power originally coined by Finkelstein (1992). However, these studies have taken different proxies of CEO power. Figure 2 shows the distribution of studies across various measures of CEO power reviewed above. This figure has omitted those CEO power measures used by three or less than three studies listed in the previous paragraph.

CEO-Chair duality, 90

CEO outside directorship/network size, 16

CEO educa�on/CEO a�end elite university, 14

CEO-Chair triality/plurality, 13

CEO cash compensa�on , 9

Successor CEO is an insider, 9

Board independence, 12

Directors appointed a�er CEO took office, 8

Founder CEO or rela�ve of founding family or CEO with same last name as another

officer, 40

CEO stock ownership or

propor�on of CEO to board equity

holdings, 53

No. of years worked in the firm in different roles or no. of func�onal areas the CEO has

served in the firm, 8

CEO age, 6

CEO pay gap, 4

CEO tenure, 75

CEO is the only insider in the board, 13

CEO pay slice, 33

Ins�tu�onal Ownership/ Top outsider ownership,

Func�onal (finance) background, 4

Fig. 2 Measures of CEO power

1079CEO power and corporate strategies: a review of the literature

1 3

The review reveals that 64 studies4 have used the CEO power index to measure CEO power. These indexes consider various proxies of the four CEO power dimensions coined by Finkelstein (1992) as discussed in Sect. 2. Figure 2 shows the measures of CEO power adopted by all the studies that have either used CEO power index or individual measures of CEO power. As Fig. 2 shows, the most popular measure of CEO structural power is CEO- Chair duality, which 90 studies have adopted. CEO tenure is the most popular source of expert power, and it has been used by 75 studies, CEO stock ownership is the most popular measure of ownership power, and 53 studies have used it. Other popular measures are CEO founder (40), CEO pay slice (33), CEO outside directorship or CEO network size (16), CEO education (14), board independence (12), CEO is the only insider (13), CEO triality/ plurality (13), successor CEO is an insider (9), CEO cash compensation (9), number of years worked in the firm in different roles (8), directors appointed after CEO took office (8), CEO age (6), CEO functional background (4), CEO pay gap (4), top outside ownership (4). From Tables 3, 4, 5, 6, where we have reviewed all the studies under various streams, it is apparent that researchers favor no single measure of CEO power under any of the research streams. However, CEO duality stands out as the most popular measure of CEO power, as shown above, with 90 studies that have adopted this measure.

4 Theories related to CEO power literature

We have identified twenty-six theories pertaining to CEO power literature. A summary of all the studies linked to these theories is shown in Table 1. The definitions of all these theo- ries are shown in the first column of Table 1. Some of these theories have received mixed support from empirical studies. These are shown in Panel A. Some theories have received unanimous support from empirical studies, which are reported in Panel B, and some theo- ries have been refuted by empirical literature, and these are shown in Panel C.

4.1 Theories that have received mixed support

The most widely referred theory about CEO power literature is agency theory. Based on this theory, studies have found that CEO power leads to lower firm value and performance (Bebchuk et al. 2011; Veprauskaitė and Adams 2013; Duru et al. 2016); needs increased monitoring by outside directors (Combs et al. 2007), could lead to entrenchment (Finkel- stein and D’Aveni 1994); lower leverage (Jiraporn et al. 2012; Chintrakarn et al. 2014); poor credit rating and higher bond yields (Liu and Jiraporn 2010); lower bank risk-taking (Pathan 2009); moderates the positive relation between board strength and firm strategy (Tuwey and Tarus 2016); lower dividend payout (Chintrakarn et al. 2018); use less equity- based compensation that weakens board monitoring (Ryan and Wiggins; 2004); lower CSR exposure and alleviates the positive effect of board capital on CSR exposure (Muttakin et al. 2018); reduces the effect of ESG disclosure on market-based risk than accounting- based risk (Menla Ali et al. 2023); positively influences earnings management (Le et al. 2022); lower R&D investment (Naaman and Sun 2022); lower entrepreneurial orientation (Saiyed et al. 2023); lower idiosyncratic volatility (Tan and Liu 2016); positively related

4 Refer to “Measures of CEO Power” columns in Tables 3, 4, 5, 6.

1080 S. Brahma, F. Economou

1 3

Ta bl

e 1

T he

or ie

s o f C

EO p

ow er

a nd

e m

pi ric

al re

su lts

Pa ne

l A : t

he or

ie s

Em pi

ric al

st ud

ie s t

ha t s

up po

rt th

e th

eo rie

s Em

pi ric

al st

ud ie

s t ha

t r ef

ut e

th e

th eo

rie s

A ge

nc y

th eo

ry : t

he re

c ou

ld b

e co

nfl ic

t o f i

nt er

es ts

tw ee

n pr

in ci

pa ls

a nd

a ge

nt s J

en se

n an

d M

ec kl

in g

(1 97

6) . T

hi s t

he or

y su

gg es

ts th

at p

ow er

fu l C

EO s

m ig

ht sw

ay th

ei r i

nfl ue

nc e

ov er

th e

bo ar

d an

d cu

bo ar

d m

on ito

rin g

m ec

ha ni

sm th

at c

ou ld

c au

se p

oo r

fir m

p er

fo rm

an ce

a nd

lo w

er ri

sk -ta

ki ng

B eb

ch uk

e t a

l. (2

01 1)

; V ep

ra us

ka itė

a nd

A da

m s (

20 13

); B

ro dm

an n

et a

l. (2

02 1)

; D ur

u et

a l.

(2 01

6) ; C

om bs

a l.

(2 00

7) ; J

ira po

rn e

t a l.

(2 01

2) ; C

hi nt

ra ka

rn e

t a l.

(2 01

4) ; L

iu a

nd Ji

ra po

rn (2

01 0)

; P at

ha n

(2 00

9) ;

Tu w

ey a

nd T

ar us

(2 01

6) ; C

hi nt

ra ka

rn e

t a l.

(2 01

8) ;

Ry an

a nd

W ig

gi ns

(2 00

4) ; M

ut ta

ki n

et a

l. (2

01 8)

; Le

e t a

l. (2

02 2)

; N aa

m an

a nd

S un

(2 02

2) ; T

an a

Li u

(2 01

6) ; P

uc he

ta -M

ar tín

ez a

nd G

al le

go -Á

lv ar

(2 02

1) ; M

en la

A li

et a

l. (2

02 3)

H ay

ne s e

t a l.

(2 01

9) ; S

an de

rs a

nd C

ar pe

nt er

(1 99

8) ; P

ol -

lo ck

e t a

l. (2

00 2)

; J ar

oe nj

itr ka

m e

t a l.

(2 02

0) ; S

hu i e

t a l.

(2 02

2) ; S

he ik

h (2

01 9a

); Sh

ei kh

(2 01

9b );

Lu o

(2 01

5) ;

M ol

la h

an d

Li lje

bl om

(2 01

6) ; S

ar io

l a nd

A be

be (2

01 7)

; Sh

ei kh

(2 01

8a );

Sh ei

kh (2

01 8b

); Sa

le h

et a

l. (2

02 2)

, Ti

en e

t a l.

(2 01

3) ; N

tim e

t a l.

(2 01

9) ; M

as w

ad i a

A m

ra n

(2 02

M an

ag er

ia l p

ow er

/h eg

em on

y or

re nt

e xt

ra ct

io n

th eo

ry :

C EO

s u se

th ei

r p ow

er o

ve r t

he b

oa rd

to e

xt ra

ct re

th ro

ug h

in cr

ea se

d co

m pe

ns at

io n.

S om

e stu

di es

h av

e m

ea su

re d

th is

in te

rm s o

f C EO

p ay

sl ic

e B

eb ch

et a

l. (2

01 1)

; C ho

e et

a l.

(2 01

4) ; B

ug ej

a et

a l.

(2 01

C ho

e et

a l.

(2 01

4) ; N

tim e

t a l.

(2 01

9) ; H

en de

rs on

e t a

l. (2

01 0)

; S ha

ha b

et a

l. (2

02 0)

; T ia

n an

d Ya

ng (2

01 4)

; Sh

ah ab

e t a

l. (2

02 2)

; A l-S

ha er

e t a

l. (2

02 3)

; Z hu

e t a

l. (2

02 1)

; J ou

ra e

t a l.

(2 02

2) ; H

ill e

t a l.

(2 01

6) ; K

al yt

a an

d M

ag na

n, (2

00 8)

; T ie

n et

a l.

(2 01

Lu o

(2 01

5) ; B

ug ej

a et

a l.

(2 01

7) ; Z

ou e

t a l.

(2 02

1) ; T

ie n

et a

l. (2

01 3)

O pt

im al

c on

tra ct

th eo

ry a

nd d

yn am

ic b

ar ga

in in

g th

eo ry

: Pa

y str

uc tu

re a

nd in

ce nt

iv e

co nt

ra ct

s c ou

ld e

ffe ct

iv el

y im

pr ov

e pe

rfo rm

an ce

a nd

re du

ce a

ge nc

y co

sts B

eb -

ch uk

a nd

F rie

d (2

00 3)

N tim

e t a

l. (2

01 9)

; Z hu

e t a

l. (2

02 1)

; B ug

ej a

et a

l ( 20

17 )

B oy

er (2

00 5)

U pp

er e

ch el

on th

eo ry

: fi rm

s’ st

ra te

gi c

ou tc

om e

co ul

d be

pl ai

ne d

by th

e TM

T ba

ck gr

ou nd

a nd

c ha

ra ct

er ist

ic s

H am

br ic

k an

d M

as on

(1 98

B ig

le y

an d

W ie

rs em

a (2

00 2)

; S im

se k

(2 00

7) ; S

un a

Sk ou

se n

(2 02

2) ; J

ia e

t a l.

(2 02

2) ; S

ai ye

d et

a l.

(2 02

3) Ta

n an

d Li

u (2

01 6)

A pp

ro ac

h/ In

hi bi

tio n

th eo

ry o

f p ow

er : I

nc re

as ed

p ow

le ad

s t o

ap pr

oa ch

-r el

at ed

tr ai

ts , w

hi le

re du

ce d

po w

le ad

s t o

in hi

bi tio

n tra

its K

el tn

er e

t a l.

(2 00

Le w

el ly

n an

d M

ul le

r-K ah

le (2

01 2)

; Z ha

ng e

t a l.

(2 02

2) ;

Zh ou

e t a

l. (2

02 1)

; S ai

ye d

et a

l. (2

02 3)

O rg

an iz

at io

n th

eo ry

: v ig

ila nt

b oa

rd s f

av or

C EO

d ua

lit y

as it

c re

at es

a n

un am

bi gu

ou s l

in e

of a

ut ho

rit y

w ith

or ga

ni za

tio ns

a nd

e st

ab lis

he s c

la rit

y in

d ec

is io

n- m

ak -

in g

Fi nk

el ste

in a

nd D

’A ve

ni (1

99 4)

A da

m s e

t a l.

(2 00

5) ; H

ai de

r a nd

F an

g (2

01 8)

; S he

ik h

(2 01

8b );

B re

ue r e

t a l.

(2 02

2) ; S

ha bi

r e t a

l. (2

02 3)

Zo u

et a

l. (2

02 1)

1081CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 1

(c on

tin ue

Pa ne

l A : t

he or

ie s

Em pi

ric al

st ud

ie s t

ha t s

up po

rt th

e th

eo rie

s Em

pi ric

al st

ud ie

s t ha

t r ef

ut e

th e

th eo

rie s

St ak

eh ol

de r t

he or

y: C

en tra

l t en

et o

f C SR

a nd

it a

ss er

th at

m an

ag er

s s ho

ul d

w or

k to

w ar

ds a

dd re

ss in

g th

e go

al s o

f a ll

th e

st ak

eh ol

de rs

F re

em an

a nd

E va

n (1

99 0)

(L i e

t a l.

20 18

); Pu

ch et

a- M

ar tín

ez a

nd G

al le

go -Á

lv ar

(2 02

1) ; A

l-S ha

er e

t a l.

(2 02

3) H

ar pe

r a nd

S un

(2 01

Pa ne

l B : t

he or

ie s

Em pi

ric al

st ud

ie s t

ha t s

up po

rt th

e th

eo rie

C om

pe ns

at io

n tra

ns pa

re nc

y th

eo ry

: d ev

ia tio

n of

T M

T pa

y fro

m o

pt im

um d

ue to

an ag

er ia

l p ow

er is

c on

di tio

na l o

n tra

ns pa

re nc

y of

m an

ag er

ia l c

om pe

ns at

io n

K al

yt a

(2 00

K al

yt a

(2 00

Re so

ur ce

d ep

en de

nc e

th eo

ry : fi

rm s c

ol la

bo ra

te w

ith e

xt er

na l s

ta ke

ho ld

er s t

o ga

ac ce

ss to

re so

ur ce

s n ee

de d

to ru

n th

e bu

si ne

ss P

fe ffe

r a nd

S al

an ci

k (1

97 8)

H ay

ne s a

nd H

ill m

an (2

01 0)

; C he

n, (2

01 4)

; K ra

us e

et a

l. (2

01 6)

; M as

w ad

i a nd

A m

ra n

(2 02

3) C

om m

on se

ns e

th eo

ry : s

uc ce

ss or

C EO

s a re

n om

in at

ed b

as ed

o n

ex pe

rie nc

e an

d pr

of es

si on

al b

ac kg

ro un

d Ti

ng (2

01 3)

D ire

ct or

re pu

ta tio

n th

eo ry

: d ire

ct or

s p ur

su e

to c

re at

e an

d up

ho ld

th ei

r r ep

ut at

io n,

er eb

y im

pr ov

in g

th ei

r h um

an c

ap ita

l t o

en ha

nc e

th ei

r c ha

nc es

o f g

et tin

g ap

po in

t- m

en ts

in o

th er

b oa

rd s F

am a

(1 98

0) ; F

am a

an d

Je ns

en (1

98 3)

Za ja

c an

d W

es tp

ha l (

19 96

a, b

); Za

ja c

an d

W es

tp ha

l ( 19

96 b)

; D eB

os ke

y et

a l.

(2 01

D yn

am ic

p er

fo rm

an ce

th eo

ry : C

EO s’

p ow

er a

nd d

om in

an ce

in cr

ea se

w ith

te nu

re ,

le ad

in g

to C

EO a

nd b

oa rd

e nt

re nc

hm en

t M ill

er (1

99 1)

C ol

ak a

nd L

ilj eb

lo m

(2 02

Effi ci

en cy

th eo

ry : a

dv an

ta ge

s o f h

iri ng

p ow

er fu

l C EO

s o ut

w ei

gh a

ge nc

y co

sts C

hi u

et a

l. (2

02 1)

G ov

er na

nc e

th eo

ry : fi

rm g

ov er

na nc

e de

pe nd

s o n

th e

un de

rly in

g po

w er

st ru

gg le

s a nd

w d

ec is

io n-

m ak

in g

po w

er is

c on

fe rr

ed to

th e

bo ar

d pl

ay er

s D ai

ly e

t a l.

(2 00

3) Le

w el

ly n

an d

Fa in

sh m

id t (

20 17

)

H um

an c

ap ita

l t he

or y:

C EO

s’ k

no w

le dg

e an

d ex

pe rti

se b

rin g

hu m

an c

ap ita

l t ha

t co

ul d

im pr

ov e

fir m

p er

fo rm

an ce

C off

(2 00

2) H

ua ng

a nd

G ao

(2 02

Im pr

es si

on m

an ag

em en

t t he

or y:

fi rm

s a re

st ro

ng ly

m ot

iv at

ed to

c on

ce al

b ad

o pe

ra t-

in g

pe rfo

rm an

ce M

er ke

l-D av

ie s a

nd B

re nn

an (2

00 7)

Su n

et a

l. (2

02 2)

Li fe

-c yc

le th

eo ry

: fi rm

s i n

th e

m at

ur e

st ag

e of

th ei

r b us

in es

s l ife

c yc

le te

nd to

p ay

vi de

nd s a

s t he

y ha

ve le

ss er

in ve

stm en

t o pp

or tu

ni tie

s D eA

ng el

o et

a l.

(2 00

6) H

ar jo

to a

nd Jo

(2 00

M an

ag er

ia l d

is cr

et io

n th

eo ry

: m an

ag er

s’ c

ha ra

ct er

ist ic

s a re

re fle

ct ed

in th

ei r c

or -

po ra

te st

ra te

gi es

w he

n m

an ag

er s a

re g

iv en

m or

e fr

ee do

m in

th e

de ci

si on

-m ak

in g

pr oc

es s D

on al

d (2

00 7)

Sc ho

po hl

e t a

l. (2

02 1)

1082 S. Brahma, F. Economou

1 3

Ta bl

e 1

(c on

tin ue

Pa ne

l B : t

he or

ie s

Em pi

ric al

st ud

ie s t

ha t s

up po

rt th

e th

eo rie

M an

ag er

ia l e

nt re

nc hm

en t t

he or

y: m

an ag

er s m

ak e

in ve

stm en

t d ec

is io

ns in

th ei

r s ta

ke ,

an d

it co

ul d

be c

os tly

fo r t

he sh

ar eh

ol de

rs to

re m

ov e

th em

S hl

ei fe

r a nd

V is

hn y

(1 98

Pa rk

e t a

l. (2

01 8)

Po w

er c

irc ul

at io

n th

eo ry

: t he

re is

a c

on tin

uo us

p ow

er st

ru gg

le b

et w

ee n

th e

C EO

a nd

e bo

ar d

Sh en

a nd

C an

ne lla

(2 00

2) C

om bs

e t a

l. (2

00 7)

; A da

m s e

t a l.

(2 00

5) ; B

ra hm

an a

et a

l. (2

02 1)

Pr os

pe ct

th eo

ry : i

nd iv

id ua

l d ec

is io

ns a

re b

as ed

o n

pe rc

ei ve

d ga

in s r

at he

r t ha

n lo

ss es

ah ne

m an

a nd

T ve

rs ky

(1 97

9) Ta

ng a

nd C

ro ss

an (2

01 7)

; T an

g et

a l.

(2 01

Se lf-

ca te

go riz

at io

n th

eo ry

/a ttr

ac tio

n- se

le ct

io n-

at tri

tio n/

S oc

ia l c

at eg

or iz

at io

n th

eo ry

: in

di vi

du al

s s ee

k to

c on

str uc

t h om

og en

eo us

g ro

up s T

ur ne

r e t a

l. (1

98 7)

W es

tp ha

l a nd

Z aj

ac (1

99 5)

; C an

ne lla

a nd

S he

n (2

00 1)

; B uy

l e t a

l. (2

01 1)

; Z ha

ng e

t a l.

(2 01

1) So

ci al

c ap

ita l t

he or

y: so

ci al

re la

tio ns

hi ps

c ou

ld h

el p

in th

e ac

cu m

ul at

io n

of h

um an

pi ta

l G

re ve

a nd

M its

uh as

hi (2

00 7)

St ru

ct ur

al e

la bo

ra tio

n th

eo ry

: l aw

s a nd

le ga

l r eq

ui re

m en

ts se

rv in

g in

sti tu

tio na

l l og

ar e

fu nd

am en

ta lly

a m

bi gu

ou s a

nd a

re su

bj ec

t t o

in te

rp re

ta tio

n Ed

el m

an (1

99 2)

Jo se

ph e

t a l.

(2 01

Pa ne

l C : t

he or

ie s

Em pi

ric al

st ud

ie s t

ha t r

ef ut

e th

eo rie

St ew

ar ds

hi p

th eo

ry : C

EO d

ua lit

y is

li ke

ly to

h av

e a

fa vo

ra bl

e eff

ec t o

n fir

m p

er fo

rm an

ce a

s C EO

s i n

th ei

r d ua

l r ol

e co

ul d

ch an

ne l

re so

ur ce

s t ha

t w ou

ld in

cr ea

se fi

rm p

er fo

rm an

ce D

on al

ds on

a nd

D av

is (1

99 1)

Le w

el ly

n an

d Fa

in sh

m id

t ( 20

17 )

Sh ar

eh ol

de r t

he or

y: sh

ar eh

ol de

r w ea

lth m

ax im

iz at

io n

is th

e pr

im ar

y ai

m o

f a ll

co rp

or at

io ns

, a nd

in th

is re

ga rd

, fi rm

C SR

in iti

at iv

co ul

d le

ad to

a fa

ll in

fi rm

v al

ue F

rie dm

an (1

97 0)

A hs

an e

t a l.

(2 02

Th is

T ab

le su

m m

ar iz

es a

ll th

e th

eo rie

s r el

at ed

to C

EO p

ow er

li te

ra tu

re .

1083CEO power and corporate strategies: a review of the literature

1 3

to CSR (Pucheta-Martínez and Gallego-Álvarez 2021); lower corporate sexual orientation policies (Brodmann et al. 2021).

On the other hand, some studies have refuted agency theory. Some of these studies advance that agency problems through CEO power could be mitigated by board monitor- ing (Haynes et al. 2019); longer-term CEO pay, bigger TMT, and CEO non-duality (Sand- ers and Carpenter 1998); CEO ownership power (Pollock et al. 2002); market discipline (Jaroenjitrkam et al. 2020). Shui et al. (2022) contend that CEO power in weak boards should be complemented with institutional ownership to increase environmental innova- tion. Agency theory is refuted by some studies, which find that powerful CEOs have lower CSR engagement (Sheikh 2019a; Maswadi and Amran 2023), take more risk in the pres- ence of discipline through increased market competition and strong corporate governance (Sheikh 2019b), no significant effect on pay performance (Luo 2015), positive effect on firm performance (Mollah and Liljeblom 2016), engage in more exploitative innovation (Sariol and Abebe 2017; Sheikh 2018a), increases firm value (Sheikh 2018b), positively affects firm performance and institutional ownership (Saleh et al. 2022), CEO directorship improves firm performance (Tien et al. 2013). Boards with concentrated ownership have higher second-tier agency problems (board power and vested interests of other directors) than first-tier agency problems (CEO power and their vested interests) (Ntim et al. 2019).

The second most popular theory is managerial power or rent extraction theory. In sup- port of this theory, some studies have found that CEO managerial power is positively related to CPS, and where there is a cap in salary, CEO power causes rent extraction through stock-based compensation (Choe et al. 2014), leads to positive but relatively small pay-for-performance support (PPS) (Ntim et al. 2019), lesser decrease in bonus compen- sation, increase in equity compensation and greater chances of getting bonus when there are layoffs in their firms (Henderson et al. 2010), positively related to stock price crash (Shahab et al. 2020), positively related to bank CEO incentive pay (Tian and Yang 2014), causes CSR decoupling (Shahab et al. 2022), takes lesser environmental initiatives (Al- Shaer et al. 2023), increases CEO compensation and the gap between CEO and other exec- utives’ pay (Zhu et al. 2021; Joura et al. 2022) and is positively related to long term pay (Tien et al. 2013). Others have reported that economic terms could not explain powerful CEOs’ excessive compensations but could be attributed to their power over the board (Hill et al. 2016) and rent extraction is contingent on the extent of transparency of management compensation (Kalyta and Magnan 2008). Refuting this theory, some studies show that CEO power does not lead to an increase in executive compensation in Chinese banks (Luo 2015); does not increase CPS overtime for newly appointed CEOs (Bugeja et al. 2017), is positively related to firm risk (Zou et al. 2021), and negatively affects CEOs’ long term and short term pays (Tien et al. 2013).

Another theory pertaining to CEO power literature, particularly on CEO power and executive compensation literature, is grounded in optimal contract theory and dynamic bar- gaining theory. In support of this theory, studies find that pay for performance sensitivity improves in companies with powerful founding and shareholding CEOs (Ntim et al. 2019). CEO-chair age dissimilarity could restrain CEOs’ rent-seeking behavior (Zhu et al. 2021), and firms tend to reduce excess CPS (Bugeja et al. (2017). Refuting this theory, Boyer (2005) argues that this theory is likely to fail as powerful managers use their power to con- vert stock options into financial market incentives.

The fourth theory is the upper echelon theory. Grounded in this theory, studies find that CEO long tenure indirectly leads to positive risk-taking through CEO power on TMT risk- taking tendencies (Simsek 2007), CEO equity ownership has a positive effect on CSR ini- tiatives (Jia et al. 2022), CEO heir apparent experience influence the cognitive orientation

1084 S. Brahma, F. Economou

1 3

that leads them to take decisions that maintain the organization’s status quo instead of cor- porate refocusing (Bigley and Wiersema 2002), and firms’ strategic choices are swayed by CEO and TMT attributes (Byun and Al-Shammari 2021 and Sun and Skousen 2022). Refuting this theory, Tan and Liu (2016) find that CEO experience measured by long ten- ure could lead to entrenchment.

Another theory related to CEO power is the approach/inhibition theory of power. This theory suggests that power could trigger an individual’s neurobiological approach to focus on positive outcomes and ignore the negative consequences. Based on this theory, Lewellyn and Muller-Kahle (2012) find that CEO power leads to excessive risk-taking, and Zhang et al. (2022) find that CEO power promotes environmental innovation. Refuting this theory, Zhou et al. (2021) find that CEO power disinhibition could thwart strategic change, and Saiyed et al. (2023) show that CEO power reduces the effect of entrepreneurial orien- tation on firm performance.

The next related theory is organization theory, and based on this theory, studies find that powerful CEOs are more confident in their decision-making and undertake risky decisions that could enhance firm performance (Sheikh 2018a), significantly impacts on firms’ CSR policies (Breuer et al. 2022), powerful CEOs take more extreme decisions whereas deci- sions taken by a larger group is more moderate (Adams et al. 2005 and Haider and Fang 2018), powerful CEOs with strong boards improves firm performance (Shabir et al. 2023). On the other hand, Zou et al. (2021) find mixed evidence on CEO power and firm risk.

In support of the stakeholder theory, Pucheta-Martínez and Gallego-Álvarez (2021) and Al-Shaer et al. (2023) find that CEO compensation is linked to CSR initiatives, and Li et al. (2018) report that Environmental, Social, and Governance (ESG) score is more value enhancing in the presence of powerful CEOs. Refuting this theory, Li et al. (2016), Mut- takin et al. (2018), Harper and Sun (2019), Maswadi and Amran (2023) find that power- ful CEOs have lesser engagement in CSR activities. Jia et al. (2022) find mixed evidence between CEO power and CSR disclosure.

4.2 Theories that have received unanimous support from empirical studies

In support of the compensation transparency theory in Panel B, Kalyta (2009) suggests that CEO power determines the supplemental executive retirement plan (SERP) ben- efits whereas transparency in compensation is driven by economic factors. In support of resource dependence theory, studies find that powerful CEOs could strengthen the effect of board power on R&D investment (Haynes and Hillman 2010; Chen 2014), CEO power is required in firms that aim to cater to customers’ needs and firms operating in competi- tive product markets with higher cultural power distance (Krause et al. 2016), CEO power moderates the effect of board director attributes on CSR disclosure. Ting (2013) finds sup- port for common-sense theory and finds that when successor CEOs have similar power as predecessors, turnover announcements generate positive abnormal returns.

In support of director reputation theory, studies find that powerful CEOs show aggres- siveness and optimism in their earnings announcement tone (DeBoskey et al. 2019), tend to hire successor CEOs who have similar demography as them (Zajac and Westphal 1996a, b), and attract directors from boards with governance change (Zajac and Westphal 1996b). Colak and Liljeblom (2022) find that CEOs’ long tenure could be detrimental to firm per- formance even after the long-tenured CEO is replaced. Chiu et al. (2021) find support for efficiency theory and show that powerful CEOs with knowledge capital lead to an increase in firm value. Lewellyn and Fainshmidt (2017) show that discretion arising from CEO

1085CEO power and corporate strategies: a review of the literature

1 3

duality could complement with firm and industry discretions to enhance firm value, thus supporting governance theory. Based on human capital theory, Huang and Gao (2022) show that CEO power leads to reduced debt policy persistence. In support of impression management theory, Sun et al. (2022) find that the positive association between CEO power and reading difficulty is due to bad operating performance. Harjoto and Jo (2009) report that CEO power favors firm performance in the initial stages of the business and is detrimental to firm performance in more advanced or mature stages of business, thus sup- porting life-cycle theory. Grounded on managerial discretion theory, Schopohl et al. (2021) find that lower-powered CEOs and diverse boards could lead female CFOs to reduce lever- age in organizations.

Managerial entrenchment theory finds support from Park et al. (2018), who show that the negative relation between CEO hubris and firm performance is aggravated by CEO power. Grounded in power circulation theory, Combs et al. (2007) find that powerful CEOs could maintain a dominant coalition in the board and the strategic decisions taken by weaker CEOs result in poor outcome (Adams et al. 2005; Brahmana et al. 2021). Based on prospect theory, Tang and Crossan (2017) and Tang et al. (2011) find that troubled firms might take recourse to risky strategies by hiring dominant CEOs.

Several studies have found support for self-categorization or social categorization the- ory. Based on this theory, studies report that powerful CEOs are less likely to promote the heir apparent (Cannella and Shen 2001), less likely to share information with TMT (Buyl et al. 2011), prefer to hire directors of the same demography (Westphal and Zajac 1995), and non-CEO executives tend to exit firms where there is demographic dissimilarity (Zhang et al. 2011).

In support of the social capital theory, Greve and Mitsuhashi (2007) advance that pow- erful CEOs’ social capital helps them to make strategic decisions without reliance on their subordinates. Based on structural elaboration theory, Joseph et al. (2014) show that a CEO- only board might embrace board independence but could cause CEO entrenchment.

4.3 Theories that are refuted by empirical studies

Lewellyn and Fainshmidt (2017) find partial support for stewardship theory and show that only when CEO duality is linked to certain other CEO powers this outcome is accom- plished. Shareholder theory is refuted by Ahsan et al. (2022) as they report that powerful CEOs could create firm value through CSR activities when CSR practices align with firms’ objectives.

4.4 Studies not related to any of the theories on CEO power

We have found the following studies unrelated to any of the theories discussed in Sect. 3. We have presented all these studies in Tables 3, 4, 5, 6. Table 3 discusses the following studies under CEO power and firm performance that are not related to any theory—Abebe et al. (2011), Ahsan et al. (2022), Cormier et al. (2016), Daily and Johnson (1997), Fang et al. (2020), Gunasekarage et al. (2020), Han et al. (2016), Li (2016), Tang (2021), Ting et al. (2017), Usman et al. (2018) and Table 4 shows the following studies under CEO power and executive compensation that are not related to any theory–Al-Dhamari et al. (2022), Joura et al. (2022). Table 5 presents the following studies on CEO power and firm risk-taking that are not related to any theory—Chintrakarn et al. (2015), Huang and Gao (2022), Korkeamaki et al. (2017), Pour et al. (2023), Zhao et al. (2023). Table 6 reports

1086 S. Brahma, F. Economou

1 3

the following studies under CEO power and corporate strategies that are not related to any theory—Al-Shaer et al. (2023), Bristy et al. (2022), Brodmann et al. (2022), Dowell et al. (2011), Dutta et al. (2011), Fahlenbrach (2009), Fralich and Papadopoulos (2018), Harper et al. (2020), Kim et al. (2017), Lo and Shiah-Hou (2022), Onali et al. (2016), Urban (2019), Walls and Berrone (2017), Zajac and Westphal (1996a, b), Zagonov and Salganik- Shoshan (2018).

5 Methodology

In Table 2, we have provided a summary of all the models used by different studies to examine the various aspects of CEO power, like firm performance, executive compen- sation, firm risk-taking, and other corporate strategies. Table 2 shows that the four most popular regression models are fixed effect (FE), ordinary least square (OLS), generalized method of moments (GMM), and two-stage least square (2SLS) regressions. One of the challenges researchers face in corporate governance studies is the issue of endogeneity. The problem of endogeneity in econometrics is caused when there is a correlation between explanatory variables and error terms, and this could be caused by reverse causality, omis- sion of variables, or errors in the variables. In many studies, the issue of reverse causality or simultaneity in the variables has been addressed by 2SLS or 2SLS-IV regressions. Sev- eral studies have adopted GMM regression to address dynamic endogeneity bias in panel data. Other studies have addressed endogeneity concerns by adopting Heckman’s two-stage regression to address sample selection bias and IV regression to address endogenous treat- ment effects. Several studies have also adopted lagged independent variables and subsam- ple analysis to address endogeneity. FE regression that controls for firm characteristics is also adopted by several studies to address endogeneity. Other studies have used 3SLS and difference in difference (DiD) regression to address endogeneity. Few studies have applied the propensity score matching method (PSM) to randomize the endogenous treatment vari- ables in the absence of reliable IV instruments. These studies are all listed in Table 2. Li (2016) extensively addresses the endogeneity issue to empirically investigate CEO power on corporate governance factors and recommends GMM, IV, and FE models as the top models to address this issue. This study also recommends including meaningful control variables in addition to firm fixed-effects and year fixed-effects. However, not all the stud- ies reported in Tables 3, 4, 5, 6 have tackled endogeneity. Endogeneity concern is a promi- nent issue of corporate governance research models. Hence, research related to CEO power literature should adopt one or two of the above-mentioned models that address endogene- ity. Results of the studies that have not adopted any of these models to tackle endogeneity should be considered with some skepticism. These studies can be identified by observing the methodology columns in Tables 3, 4, 5, 6.

6 CEO power and firm performance

Several studies examine how CEO power affects firm performance by considering Fin- kelstein’s (1992) four categories of CEO power discussed in the previous section. Table 3 reviews all the studies that examine CEO power and firm performance.

Simsek (2007) advances that CEO tenure has a favorable effect on firm performance by directly impacting TMT’s risk-taking initiatives. Tien et al. (2013) examine the four

1087CEO power and corporate strategies: a review of the literature

1 3

Table 2 Research methodology

Methodology Studies

DiD regression Bristy et al. (2022); Colak and Liljeblom (2022); Schopohl et al. (2021)

Entropy balancing Brodmann et al. (2021); Brodmann et al. (2022); Colak and Liljeblom (2022)

Event study Combs et al. (2007) Exploratory factor analysis Wei (2021) Fama–MacBeth Harper et al. (2020); Kim et al. (2017) Fixed effect (FE)/Industry FE regression Ahsan et al. (2022); Bebchuk et al. (2011); Chen

(2014); Chintrakarn et al. (2014); Chintrakarn et al. (2015); Chintrakarn et al. (2018); DeBoskey et al. (2019); Gunasekarage et al. (2020); Haider and Fang (2018); Harper and Sun (2019); Harper et al. (2020); Henderson et al. (2010); Jia et al. (2022); Jiraporn et al. (2012); Kalyta (2009); Le et al. (2022); Li (2016); Lo and Shiah-Hou (2022); Luo (2015); Ntim et al. (2019); Saleh et al. (2022); Schopohl et al. (2021); Sheikh (2018b); Sheikh (2019a); Sheikh (2019b); Shahab et al. (2022); Tang et al. (2011); Tang (2021); Tien et al. (2013); Urban (2019); Walls and Berrone (2017); Zhu et al. (2021)

FE with lagged independent variables/Multiple- high dimensional FE

Altunbas et al. (2020); Schopohl et al. (2021); Shabir et al. (2023)

Feasible general least squares (FGLS) regression Greve and Mitsuhashi (2007) Glejser test Adams et al. (2005); Pathan (2009) Generalized estimation equation Krause et al. (2016); Zhang et al. (2022) Generalized least square (GLS)/two-stage GLS

regression Park et al. (2018); Pathan (2009); Westphal and Zajac

(1995); Zhang and Rajagopalam (2010); Pour et al. (2023)

Generalized method of moments (GMM)/one-step/ two-step GMM/IV-GMM regression

Al-Shaer et al. (2023); Altunbas et al. (2020); Brahmana et al. (2021); Brodmann et al. (2022); Duru et al. (2016); Haider and Fang (2018); Haynes et al. (2019); Joura et al. (2022); Li (2016); Luo (2015); Pucheta-Martínez and Gallego-Álvarez (2021); Shahab et al. (2022); Pathan (2009); Saleh et al. (2022); Tan and Liu (2016); Veprauskaitė and Adams (2013); Pour et al. (2023)

Heckman two-stage estimation Al-Shaer et al. (2023); Colak and Liljeblom (2022); Cyert et al. (2002); Harjoto and Jo (2009); Hender- son et al. (2010); Kim et al. (2017); Li et al. (2018); Onali et al. (2016); Zajac and Westphal (1996a, b)

Instrumental variable (IV) regression/IV-GMM Fahlenbrach (2009); Graham et al. (2020); Harjoto and Jo (2009); Jaroenjitrkam et al. (2020); Li (2016); Sheikh (2018b); Sheikh (2019b); Sheikh (2022); Usman et al. (2018)

Lagged independent variables/lagged hierarchical regression/lagged dependent/binomial hierar- chichal regression

Adams et al. (2005); Al-Dhamari et al. (2022); Altunbas et al. (2020); Brodmann et al. (2021); Brodmann et al. (2022); Chen (2014); Li (2016); Usman et al. (2018); Zhang et al. (2011)

Linear probability model Sheikh (2022)

1088 S. Brahma, F. Economou

1 3

Table 2 (continued)

Methodology Studies

Logit regression Abernethy et al. (2015); Chintrakarn et al. (2018); Cormier et al. (2016); Lisic et al. (2016); Westphal and Zajac (1995)

Logistic regression Chikh and Filbien (2011); Dutta et al. (2011); Horner and Valenti (2012); Kim et al. (2017); Lewellyn and Muller-Kahle (2012); Lo and Shiah-Hou (2022); Pollock et al. (2002); Sanders and Carpenter (1998); Sun and Skousen (2022); Tian and Yang (2014); Wei (2021)

Log-likelihood regression Dowell et al. (2011) Moderated regression analysis/Hierarchical moder-

ated regression analysis Abebe et al. (2011); Bigley and Wiersema (2002);

Combs et al. (2007); Haynes and Hillman (2010); Tuwey and Tarus (2016)/ Zhou et al. (2021)

Multinomial logistic regression Cannella and Shen (2001) Necessity analysis Lewellyn and Fainshmidt (2017); Shui et al. (2022) Negative binomial regression with maximum likeli-

hood estimation Sariol and Abebe (2017)

Ordinary least square (OLS)/Pooled OLS regression Abernethy et al. (2015); Baker et al. (2019); Breuer et al. (2022); Bristy et al. (2022); Bugeja et al. (2017); Buyl et al. (2011); Brodmann et al. (2021); Chintrakarn et al. (2014); Chintrakarn et al. (2018); Chiu et al. (2022); Choe et al. (2014); Duru et al. (2016); Elhagrasey et al. (1999); Fang et al. (2020); Fralich and Papadopoulous (2018); Graham et al. (2020); Harper et al. (2020); Hill et al. (2016); Huang and Gao (2022); Jiraporn et al. (2012); Kalyta and Magnan (2008); Kim et al. (2017); Korkeamaki et al. (2017); Lewellyn and Fainshmidt (2017); Li et al. (2016); Li et al. (2018); Liu and Jiraporn (2010); Lo and Shiah-Hou (2022); Mut- takin et al. (2018); Naaman and Sun (2022); Ryan and Wiggins (2004); Sanders and Carpenter (1998); Shahab et al. (2020); Shahab et al. (2022); Sheikh (2018b); Sheikh (2019a); Sun and Skousen (2022); Sun et al. (2022); Tang and Crossan (2017); Tian and Yang (2014); Ting (2013); Ting et al. (2017); Urban (2019); Zou et al. (2021); Maswadi and Amran (2023)

Peterson regression Chiu et al. (2021) Poisson regression Sanders and Carpenter (1998); Ting et al. (2017);

Zajac and Westphal (1996b) Propensity score matching (PSM)/PSM-DiD regres-

sion Abernethy et al. (2015); Al-Shaer et al. (2023); Colak

and Liljeblom (2022); Shahab et al. (2022) Probit regression Chintrakarn et al. (2018); Harjoto and Jo (2009);

Ryan and Wiggins (2004) Proportional hazard model Cox (1972) Abernethy et al. (2015); Urban (2019) Quantile regression Huang and Gao (2022) Random effect (RE) regression Tang (2021); Tien et al. (2013) Seemingly uncorrelated regression (SUR) Abernethy et al. (2015) Sensitivity analysis Shahab et al. (2020) Stepwise regression Bugeja et al. (2017)

1089CEO power and corporate strategies: a review of the literature

1 3

categories of CEO power and find that CEO duality adversely affects while CEO tenure increases long-term pay and leverage. They also find that CEO directorship and total pay positively influence firm performance. Ting et al. (2017) observe that CEO tenure has a favorable impact on bank performance, whereas CEO duality negatively impacts firm per- formance. They also find evidence suggesting that strong political connections could be forged through CEO expert or prestige power. Chiu et al. (2021) report that CEO founders and CEO duality with more knowledge capital are more effective than insider CEOs in improving productivity and resource deployment, which is more pronounced during the global financial crisis. Ahsan et al. (2022) also identify that powerful CEOs (proxied by CEO duality) could create firm value through CSR by aligning the CSR practices with the long-run firm objectives. Veprauskaitė and Adams (2013) examine all four categories of CEO power on the UK firms’ performance and show that CEO duality, tenure, owner- ship, and ownership concentration all adversely impact on firm performance. So, overall, the empirical evidence about the consequence of the distinct types of CEO power on firm performance is varied. In a related study, Li (2016) reports that CEO power decreases firm performance, and Li et al., (2018) find that the positive effect of firms’ ESG initiatives on firm value is enhanced by powerful CEOs.

Table 2 (continued)

Methodology Studies

Standardized cumulative average abnormal returns (SCAR)

Ting (2013)

Structural equation model Daily and Johnson (1997); Simsek (2007) Sub-sample analysis Han et al. (2016); Henderson et al. (2010); Schopohl

et al. (2021) Tobit regression Chintrakarn et al. (2018); Harper et al. (2020); Ryan

and Wiggins (2004) Two-stage least square (2SLS)/FE 2SLS regression Adams et al. (2005); Bristy et al. (2022); Brodmann

et al. (2021); Brodmann et al. (2022); Chintrakarn et al. (2014); Chintrakarn et al. (2015); Chiu et al. (2021); Colak and Liljeblom (2022); Harjoto and Jo (2009); Harper and Sun (2019); Jaroenjitrkam et al. (2020); Jiraporn et al. (2012); Li et al. (2018); Liu and Jiraporn (2010); Luo (2015); Naaman and Sun (2022); Ntim et al. (2019); Onali et al. (2016); Saleh et al. (2022); Shahab et al. (2020); Shahab et al. (2022); Sun et al. (2022); Usman et al. (2018)

2SLS-IV/ 2SLS IV-GMM regression Al-Shaer et al. (2023); Fahlenbrach (2009); Fang et al. (2020); Gunasekarage et al. (2020); Sheikh (2018a); Sheikh (2019a); Shabir et al. (2023), Menla Ali et al. (2023); Pour et al. (2023)

Two-step multilevel regression Ntim et al. (2019) 3SLS/3SLS under DiD regression Mollah and Liljeblom (2016); Onali et al. (2016);

Pathan (2009) Two-stage probit regression Chintrakarn et al. (2018); Sheikh (2022) Two-stage tobit regression Chintrakarn et al. (2018); Zou et al. (2021) Univariate analysis Chikh and Filbien (2011); Dutta et al. (2011); DeBos-

key et al. (2019); Gunasekarage et al. (2020); Li et al. (2016); Ryan and Wiggins (2004)

This Table summarizes all the research models used by empirical studies on CEO power

1090 S. Brahma, F. Economou

1 3

Ta bl

e 3

C EO

p ow

er a

nd fi

rm p

er fo

rm an

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

A be

be e

t a l.

(2 01

1) U

SA 19

90 –2

00 0

C EO

p ow

er h

as d

iv er

im pl

ic at

io ns

fo r a

c or

po ra

tu rn

ar ou

nd o

f d ec

lin in

g fir

m s b

as ed

o n

th ei

r o pe

ra t-

in g

en vi

ro nm

en t

M od

er at

ed re

gr es

si on

a na

ly si

s C

EO p

ow er

in de

x: C

co m

pe ns

at io

n to

av er

ag e

co m

- pe

ns at

io n

of o

th er

m em

be rs

T M

T, C

EO d

ua lit

y, C

ou ts

id e

di re

ct or

sh ip

, C EO

un de

r A

da m

s e t a

l. (2

00 5)

U SA

19 92

–1 99

9 C

EO p

ow er

le ad

s t o

m or

e va

ria bi

lit y

in fi

rm p

er fo

r- m

an ce

G le

js er

te st,

la gg

ed in

de pe

nd -

en t,

2S LS

C EO

p ow

er in

de x:

fo un

de r,

C EO

is th

e on

ly in

si de

r, C

tri al

ity A

hs an

e t a

l. (2

02 2)

C hi

na 20

09 –2

01 7

Po w

er fu

l C EO

s c ou

ld c

re at

e fir

m v

al ue

th ro

ug h

C SR

FE C

EO d

ua lit

B eb

ch uk

e t a

l. (2

01 1)

U SA

19 93

–2 00

4 C

EO p

ow er

g au

ge d

by C

ad ve

rs el

y aff

ec ts

fi rm

tc om

es , a

nd C

EO p

ow er

ad s t

o ag

en cy

p ro

bl em

FE C

B ra

hm an

a et

a l.

(2 02

1) M

al ay

si a

20 12

–2 01

6 C

EO p

ow er

im pr

ov es

th e

co ns

eq ue

nc e

of d

iv es

tit ur

e on

fi rm

p er

fo rm

an ce

Tw o-

ste p

G M

M C

EO p

ow er

in de

x: C

EO d

ua lit

th e

ra tio

o f n

on -a

ffi lia

te d

th e

to ta

l n um

be r o

f d ire

ct or

s, pr

op or

tio n

of C

EO to

b oa

eq ui

ty h

ol di

ng s o

f t he

fo ca

l fir

m , a

nd p

ro po

rti on

o f d

ire c-

to rs

a pp

oi nt

ed a

fte r t

he C

be ga

n hi

s o r h

er te

nu re

to th

e to

ta l d

ire ct

or s

B ug

ej a

et a

l. (2

01 7)

U SA

20 01

–2 01

0 C

PS o

f s uc

ce ss

or C

EO s i

s si

m ila

r t o

ou tg

oi ng

C PS

, a nd

os t fi

rm s t

en d

to re

du ce

ce ss

iv e

C PS

Po ol

ed O

LS , S

te pw

is e

re gr

es -

si on

C PS

1091CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 3

(c on

tin ue

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

B uy

l e t a

l. (2

01 1)

N et

he rla

nd s a

nd B

el gi

um C

EO c

ha ra

ct er

ist ic

s c ur

b TM

T fu

nc tio

na l d

iv er

si ty

d fir

m o

ut co

m e

O LS

C EO

fu nc

tio na

l b ac

kg ro

un d

(g en

er al

ist a

nd m

ar ke

tin g

sp e-

ci al

ist ),

C EO

fo un

de r,

C EO

nu re

o ve

rla p

(m ea

su re

d to

e sh

ar ed

e xp

er ie

nc e

w ith

he r T

M T

m em

be rs

) C

hi u

et a

l. (2

02 1)

U SA

20 07

–2 01

4 C

EO fo

un de

r a nd

C EO

d ua

lit y

ar e

m or

e po

w er

fu l m

ea su

re s

of C

EO p

ow er

th an

C EO

si de

rs , a

nd th

ey in

cr ea

effi ci

en cy

a nd

re so

ur ce

u til

i- za

tio n

w ith

in th

e fir

m s

Pe te

rs on

re gr

es si

on , 2

SL S

Tw o

C EO

p ow

er in

de xe

C EO

p ow

er a

nd m

or e

C EO

w er

(M PO

W ER

): C

fo un

de r,

du al

ity , C

EO in

si de

r. M

PO W

ER is

o ne

w he

n th

e C

EO h

as a

t l ea

st tw

o of

th e

th re

e po

w er

s C

hi u

et a

l. (2

02 2)

U SA

19 92

–2 01

4 Fo

r C EO

fo un

de rs

, a h

ig he

r le

ve l o

f i nv

es tm

en t i

n or

ga ni

za tio

n ca

pi ta

l w ill

cr ea

se fi

rm v

al ue

. F or

th e

C EO

a s t

he o

nl y

in si

de r o

n th

e bo

ar d,

a h

ig he

r l ev

el o

f in

ve stm

en t i

n or

ga ni

za tio

n ca

pi ta

l t o

pr ot

ec t t

he ir

po si

- tio

n co

ul d

re du

ce fi

rm v

al ue

. Th

is e

ffe ct

is la

rg er

fo r

m or

e po

w er

fu l C

EO s (

C EO

-p ow

er )

O LS

Tw o

C EO

p ow

er in

de xe

s- C

po w

er a

nd C

EO h

ig h

po w

(H -P

O W

ER ):

C EO

fo un

de r,

C EO

-o nl

y in

si de

r, C

du al

ity , C

EO H

-p ow

er (t

co m

bi na

tio n

of th

e pr

ev io

th re

e m

ea su

re s)

1092 S. Brahma, F. Economou

1 3

Ta bl

e 3

(c on

tin ue

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

C ol

ak a

nd L

ilj eb

lo m

(2 02

2) U

SA 19

93 –2

01 3

Th e

pr ec

ed in

g C

EO ’s

te nu

ha s a

n eg

at iv

e im

pa ct

o n

op er

at in

g pe

rfo rm

an ce

a nd

sto

ck re

tu rn

s, le

ad in

g to

gh er

re str

uc tu

rin g

co sts

, la

rg er

a ss

et w

rit e-

off s a

sl ow

er fi

rm re

co ve

D iD

, H

ec km

an 2

SL S

Pr ec

ed in

g C

EO ’s

te nu

re , C

du al

ity

C or

m ie

r e t a

l. (2

01 6)

C an

ad a

19 95

–2 00

9 C

EO p

ow er

a nd

h ub

ris le

ad to

fin

an ci

al m

is re

pr es

en ta

tio n

Lo gi

t r eg

re ss

io n

C EO

p ow

er in

de x:

C EO

un de

r o r C

EO c

on tro

l ( th

ei r

fa m

ily o

w ns

m or

e th

an 5

% o

f th

e sh

ar e)

D ai

ly a

nd Jo

hn so

n (1

99 7)

U SA

19 87

–1 99

0 C

EO p

ow er

a nd

fi rm

p er

fo r-

m an

ce a

re in

te rd

ep en

de nt

St ru

ct ur

al e

qu at

io n

m od

el C

EO p

ow er

in de

x: C

EO d

ua lit

in te

rd ep

en de

nt d

ire ct

or s (

no .

of d

ire ct

or s a

pp oi

nt ed

b y

C EO

), C

EO c

as h

co m

pe ns

a- tio

n to

c om

pe ns

at io

n of

h ig

h- es

t p ai

d offi

ce r,

C EO

sh ar

e ow

ne rs

hi p,

C EO

fo un

de r,

C EO

w ith

sa m

e la

st na

m e

an ot

he r o

ffi ce

r, C

EO o

ut si

di re

ct or

sh ip

, w he

th er

C EO

te nd

ed p

re sti

gi ou

s u ni

ve rs

i- tie

s, no

. o f o

th er

ro le

s C EO

rv ed

in th

e fir

m D

ur u

et a

l. (2

01 6)

U SA

19 97

–2 01

1 C

EO d

ua lit

y re

du ce

s fi rm

rfo rm

an ce

, b ut

in de

pe nd

- en

t d ire

ct or

s m ed

ia te

th is

O LS

, S ys

te m

G M

M C

EO d

ua lit

1093CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 3

(c on

tin ue

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

Fa ng

e t a

l. (2

02 0)

C hi

na 20

06 –2

01 6

C EO

st ru

ct ur

al p

ow er

cr ea

se s a

b an

k’ s e

ffe ct

iv e-

ne ss

, r is

k- ta

ki ng

a nd

lo an

tri bu

te s,

C EO

o w

ne rs

hi p

po w

er im

pr ov

es q

ua lit

y lo

an s w

hi le

C EO

e xp

er t

po w

er ra

is es

b an

k’ s a

sh ar

eh ol

de rs

’ p ro

fit s

O LS

, 2 SL

S, 2

SL S

IV C

EO p

ow er

in de

x: c

as h

co m

- pe

ns at

io n,

C EO

sh ar

eh ol

d- in

g, C

EO te

nu re

, a nd

C EO

uc at

io n

G un

as ek

ar ag

e et

a l.

(2 02

0) A

us tra

lia 20

01 –2

01 5

Th e

im pa

ct o

f C EO

p ow

va rie

s i n

te rm

s o f c

om pa

- ni

es in

v ar

io us

c at

eg or

ie s

of b

us in

es s l

ife c

yc le

a s

ou tli

ne d

in th

e B

os to

n C

on -

su lti

ng G

ro up

m at

rix

U ni

va ria

te a

na ly

si s,

FE , 2

SL S

IV C

EO p

ow er

in de

x/ C

EO p

ow er

m m

y: C

EO d

ua lit

y, C

re la

tiv e

pa y,

b oa

rd in

de pe

nd -

en ce

, e qu

ity o

w ne

rs hi

p, C

te nu

re , n

o. o

f e xe

cu tiv

e po

si -

tio ns

h el

d in

th e

fir m

, o ut

si de

re ct

or sh

ip s,

an d

C EO

uc at

io n

H an

e t a

l. (2

01 6)

U SA

19 92

–2 01

2 D

ur in

g in

du str

y do

w nt

ur ns

, fir

m s w

ith p

ow er

fu l C

EO s

pe rfo

rm ed

w or

se th

an fi

rm s

w ith

m or

e di

sp er

se d

ow ne

r- sh

Su bs

am pl

e re

gr es

si on

C EO

p ow

er in

de x:

C PS

, D ua

l- ity

, C EO

tr ia

lit y,

C EO

te nu

re ,

O w

ne rs

hi p,

D ep

en de

nt D

ire c-

to rs

, C EO

fo un

de r

H ar

jo to

a nd

Jo (2

00 9)

U SA

19 95

–2 00

5 C

EO p

ow er

is p

os iti

ve ly

la te

d to

fi rm

v al

ue a

op er

at in

g pe

rfo rm

an ce

in th

e in

iti al

st ag

e an

d ad

ve rs

el y

aff ec

ts th

e la

te r s

ta ge

s o f t

fir m

’s li

fe c

yc le

Pr ob

it, H

ec km

an 2

SL S,

IV ,

G IM

C EO

d ua

lit y,

C EO

d ua

lit y,

EO o

n no

m in

at io

n co

m m

it- te

e, C

EO p

lu ra

lit y

(C ha

ir an

d no

m in

at io

n co

m m

itt ee

)

1094 S. Brahma, F. Economou

1 3

Ta bl

e 3

(c on

tin ue

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

H ay

ne s e

t a l.

(2 01

9) U

SA 20

00 –2

00 6

Th e

ad ve

rs e

co ns

eq ue

nc e

C EO

p ow

er o

n fir

m o

ut -

co m

e is

a lle

vi at

ed b

y bo

ar d

sc ru

tin y

an d

Sa rb

an es

O xl

le gi

sl at

io n

G M

M C

EO p

ow er

in de

x: D

ua lit

Tr ia

lit y,

F ou

nd er

, o ut

si de

re ct

or sh

ip , C

EO e

du ca

tio n

Le e

t a l.

(2 02

2) V

ie tn

am 20

07 –2

01 6

C EO

p ow

er p

os iti

ve ly

im pa

ct s

ea rn

in gs

m an

ag em

en t f

fir m

s t ha

t a re

fo re

ig n-

ow ne

FE C

EO p

ow er

in de

x: C

fo un

de r,

C EO

w ith

fi na

nc ia

l ex

pe rti

se Li

(2 01

6) U

SA 19

93 –2

01 2

C EO

p ow

er re

du ce

s fi rm

rfo rm

an ce

G M

M , F

E, IV

, l ag

ge d

de pe

nd -

en t

C EO

p ay

g ap

Li e

t a l.

(2 01

8) U

K 20

04 –2

01 3

C EO

p ow

er st

re ng

th en

s th

e po

si tiv

e re

la tio

ns hi

p be

tw ee

n ES

G a

nd fi

rm v

al ue

O LS

, 2 SL

S, H

ec km

an C

EO p

ay ra

tio

M ol

la h

an d

Li lje

bl om

(2 01

6) M

ul ti-

co un

try 20

07 –2

01 1

C EO

p ow

er im

pr ov

ed b

an k

pr ofi

ta bi

lit y,

a ss

et q

ua lit

an d

in so

lv en

cy ri

sk th

ro ug

h th

e so

ve re

ig n

de bt

c ris

3S LS

u nd

er D

iff er

en ce

in D

if- fe

re nc

e (D

iD ) r

eg re

ss io

n C

EO p

ow er

in de

x: C

EO d

ua lit

C EO

is in

te rn

al ly

re cr

ui te

C EO

te nu

re , C

EO a

ge , C

ba nk

in g

ex pe

rie nc

e, C

ed uc

at io

n, Pa

rk e

t a l.

(2 01

8) V

ie tn

am 20

01 –2

00 8

C EO

h ub

ris le

ad s t

o fir

un de

rp er

fo rm

an ce

, b ut

th is

eff

ec t i

s m od

er at

ed b

y C

po w

er a

nd b

oa rd

v ig

ila nc

G LS

C EO

te nu

re , C

EO o

w ne

rs hi

C EO

n on

-d ua

lit y,

b oa

in de

pe nd

en ce

Sa le

h et

a l.

(2 02

2) Pa

le sti

ne 20

09 –2

01 9

In sti

tu tio

na l o

w ne

rs hi

p ha

s a

po si

tiv e

as so

ci at

io n

w ith

fir

m p

er fo

rm an

ce , a

nd th

is m

or e

pr on

ou nc

ed in

th e

pr es

en ce

o f p

ow er

fu l C

EO s

FE , o

ne -s

te p

G M

M , 2

SL S

C EO

p ow

er in

de x:

C EO

q ua

li- fic

at io

n, C

EO sk

ill , C

EO a

ge ,

C EO

te nu

re , C

EO o

w ne

rs hi

C EO

d is

po si

tio n,

C EO

d ua

l- ity

, C EO

p ol

iti ca

l c on

ne ct

io n,

EO b

us yn

es s

1095CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 3

(c on

tin ue

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

Sh ah

ab e

t a l.

(2 02

0) C

hi na

20 05

–2 01

5 A

dv er

se c

on se

qu en

ce s o

f C

EO s’

p ow

er o

n sto

ck p

ric e

cr as

he s a

re a

lle vi

at ed

w he

n th

er e

ar e

m or

e bo

ar d

m em

- be

rs a

nd in

th e

pr es

en ce

o f

co nc

en tra

te d

ow ne

rs hi

p an

d in

sti tu

tio na

l o w

ne rs

hi p

O LS

, 2 SL

S, se

ns iti

vi ty

al ys

is C

PS a

nd C

EO te

nu re

Sh ei

kh (2

01 8b

) U

SA 19

92 –2

01 5

C EO

p ow

er im

pr ov

es fi

va lu

e w

he re

th er

e is

h ig

h pr

od uc

t m ar

ke t c

om pe

tit io

n an

d w

he re

th e

fir m

s h av

e str

on g

co rp

or at

e go

ve rn

an ce

O LS

, I nd

us try

F E,

IV -G

M M

C EO

p ow

er in

de x:

C PS

, C EO

y ga

p, C

EO d

ua lit

y/ tri

al ity

, bo

ar d

in de

pe nd

en ce

, f ou

nd in

g fa

m ily

, C EO

te nu

Si m

se k

(2 00

7) U

SA 20

06 C

EO te

nu re

im pr

ov es

fi rm

rfo rm

an ce

o ve

r i ts

c on

tro l

on T

op M

an ag

em en

t T ea

m ’s

M T)

ri sk

-ta ki

ng te

nd en

an d

th e

fir m

’s q

ue st

fo r

en tre

pr en

eu ria

l p ro

je ct

Tw o-

ste p

str uc

tu ra

l e qu

at io

n m

od el

in g

C EO

te nu

Ta ng

e t a

l. (2

01 1)

U SA

19 97

–2 00

3 D

om in

an t C

EO s t

en d

in tro

du ce

d ev

ia nt

fi rm

st ra

t- eg

ie s t

ha t l

ea d

to e

xt re

m e

pe rfo

rm an

ce s,

i.e .,

bi g

w in

s or

si gn

ifi ca

nt lo

ss es

, w hi

ar e

w ea

ke ne

d if

th e

bo ar

d is

w er

fu l.

Po w

er fu

l b oa

rd s

co ul

d in

flu en

ce d

om in

an t

C EO

FE C

EO p

ow er

in de

x: P

er ce

nt ag

e w

ith h

ig he

r t itl

es (V

P or

c ha

ir in

th e

bo ar

d) , c

om pe

ns at

io n,

m be

r o f t

itl es

, o w

ne rs

hi p,

un de

r o r r

el at

iv e

1096 S. Brahma, F. Economou

1 3

Ta bl

e 3

(c on

tin ue

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

Ta ng

a nd

C ro

ss an

(2 01

7) U

SA 19

94 –2

00 1

Tr ou

bl ed

fi rm

s t en

d to

h ire

m in

an t C

EO s.

D om

in an

t C

EO s e

na ct

ed le

ss st

ra te

gi c

ch an

ge s i

n tro

ub le

d si

tu a-

tio ns

. H ow

ev er

, t he

y ex

ec ut

e m

or e

pl an

ne d

tra ns

fo r-

m at

io ns

in n

on -tr

ou bl

si tu

at io

O LS

C EO

p ow

er in

de x:

P er

ce nt

ag e

w ith

h ig

he r t

itl es

(V P

or c

ha ir

in th

e bo

ar d)

, c om

pe ns

at io

nu m

be r o

f t itl

es , o

w ne

rs hi

fo un

de r o

r r el

at iv

Ta ng

(2 02

1) U

SA 19

94 –2

00 1

D ev

el op

s a n

ew m

ea su

th at

is C

EO se

lf- di

sc ip

lin e

in p

ow er

u se

a nd

sh ow

s th

at C

EO se

lf- di

sc ip

lin e

in p

ow er

u se

re du

ce s t

fa vo

ra bl

e im

pa ct

o f C

po w

er o

n ex

tre m

e ou

tc om

an d

en ha

nc es

th e

in flu

en ce

C EO

p ow

er o

n fir

pe rfo

rm an

FE , R

E C

EO p

ow er

in de

x: C

fo un

de r,

C EO

b lo

ck h

ol de

r, C

EO te

nu re

Ti en

e t a

l. (2

01 3)

U SA

20 01

–2 00

5 C

EO d

ire ct

or sh

ip im

pr ov

fir m

p er

fo rm

an ce

, w he

re as

EO d

ua lit

y, te

nu re

, a nd

m po

si te

p ow

er h

av e

si gn

ifi ca

nt in

flu en

ce o

n fir

m s’

p er

fo rm

an ce

FE , R

E C

EO p

ow er

in de

x an

d in

di -

vi du

al p

ow er

m ea

su re

s: C

du al

ity , C

EO d

ire ct

or sh

(C EO

is a

ls o

di re

ct or

), C

te nu

1097CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 3

(c on

tin ue

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

Ti ng

e t a

l. (2

01 7)

C hi

na 19

99 –2

01 1

C EO

o w

ne rs

hi p

an d

ex pe

rt po

w er

m ea

su re

d by

C EO

nu re

p os

iti ve

ly a

ffe ct

nk s’

p er

fo rm

an ce

s. H

ow ev

er , s

tru ct

ur al

p ow

m ea

su re

d by

C EO

d ua

lit y

ha s a

n ad

ve rs

e eff

ec t o

n fir

m s’

p er

fo rm

an ce

. C EO

s w

ith e

xp er

t o r p

re sti

po w

er fo

ste r s

tro ng

c on

ne c-

tio ns

p ol

iti ca

lly

O LS

, P oi

ss on

C EO

d ua

lit y,

C EO

o w

ne rs

hi p,

EO te

nu re

, C EO

o ut

si de

re ct

or sh

Ti ng

(2 01

3) Ta

iw an

20 02

–2 00

6 N

on -p

ow er

fu l C

EO tu

rn ov

er s

le ad

to h

ig h

ab no

rm al

tu rn

s a nd

li qu

id ity

a nd

lo w

la til

ity . I

nv es

to rs

p re

fe r

fir m

s w he

re th

e C

EO ’s

w er

is u

nw av

er in

SC A

R to

m ea

su re

a tu

rn ov

er ’s

or t-t

er m

a nn

ou nc

em en

t O

C EO

p ow

er in

de x:

C EO

a s o

nl y

in si

de r,

C EO

d ua

lit y,

C EO

ne rs

hi p,

C EO

te nu

re , C

ou ts

id e

di re

ct or

sh ip

U sm

an e

t a l.

(2 01

8) C

hi na

20 05

–2 01

5 C

EO p

ow er

in cr

ea se

s w ith

in cr

ea se

in fi

rm ’s

g en

de r

di ve

rs ity

, s ug

ge sti

ng th

fe m

al e

di re

ct or

s w ea

ke n

m on

ito rin

g as

th ey

fa ce

or e

pr es

su re

to a

gr ee

w ith

e m

an ag

em en

La gg

ed m

od el

, 2 SL

S, IV

C PS

1098 S. Brahma, F. Economou

1 3

Ta bl

e 3

(c on

tin ue

A ut

ho r/

sa m

pl e

pe rio

d C

ou nt

ry Sa

m pl

e/ fir

m -

ye ar

o bs

er va

- tio

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

Ve pr

au sk

ai tė

a nd

A da

m s

(2 01

3) U

K 20

03 –2

00 8

C EO

p ow

er a

dv er

se ly

a ffe

ct s

fin an

ci al

p er

fo rm

an ce

. O w

n- er

sh ip

c on

ce nt

ra tio

n ha

s a n

ad ve

rs e

co ns

eq ue

nc e

on fi

pe rfo

rm an

G M

M C

EO p

ow er

in de

x: C

EO d

ua lit

C EO

te nu

re , C

EO o

w ne

rs hi

C EO

re m

un er

at io

n (s

al ar

ca sh

b on

us , o

th er

b en

efi ts

), C

EO b

on us

p ay

(p er

fo r-

m an

ce -r

el at

ed b

on us

) W

ei (2

02 1)

C hi

na 20

16 C

EO st

ru ct

ur al

p ow

fa vo

ra bl

y im

pa ct

s p ub

lic

su pp

or t b

ut le

ad s t

o a

ris e

ov er

he ad

c os

Ex pl

or at

or y

fa ct

or a

na ly

si s,

lo gi

sti c

C om

po si

te in

de x

of st

ru c-

tu ra

l p ow

er a

nd in

di vi

du al

w er

: C EO

d ua

lit y,

C EO

un de

r, C

EO c

om pe

ns at

io n,

pe rie

nc e

in a

n on

-p ro

fit

or ga

ni za

tio n,

C EO

te nu

re ,

C EO

e du

ca tio

n Zh

an g

an d

R aj

ag op

al am

01 0)

U SA

19 93

–1 99

8 Fi

rm s w

ith a

lo w

le ve

l o f

str at

eg ic

c ha

ng e

w itn

es s a

n in

cr ea

se in

p er

fo rm

an ce

. Th

e be

ne fit

s a nd

c os

ts o

f th

is c

ha ng

e ar

e ex

ac er

ba te

d w

he n

fir m

s h av

e ou

ts id

e C

EO s

G LS

C EO

d ua

lit y,

C EO

te nu

re , C

ag e,

C EO

e du

ca tio

Zh ou

e t a

l. (2

02 1)

C hi

na 20

06 –2

01 7

C en

tra liz

at io

n of

C EO

p ow

br in

gs a

bo ut

c or

po ra

te st

ra -

te gi

c ch

an ge

, w hi

le e

xt re

m e

ce nt

ra liz

at io

n of

p ow

de te

rs th

is st

ra te

gi c

ch an

G ro

up m

od er

at in

g re

gr es

si on

C EO

p ow

er in

de x:

st ru

ct ur

po w

er (d

ua lit

y, in

si de

r ow

ne rs

hi p)

, o w

ne r p

ow er

EO sh

ar e,

T op

1) , e

xp er

t po

w er

(s en

io r r

an k,

te nu

re ),

re pu

ta tio

n po

w er

(e du

ca tio

pa rt-

tim e)

Th is

T ab

le sh

ow s a

ll th

e stu

di es

o n

C EO

p ow

er a

nd fi

rm p

er fo

rm an

1099CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 4

C EO

p ow

er a

nd e

xe cu

tiv e

co m

pe ns

at io

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

A be

rn et

hy e

t a l.

(2 01

5) U

K 19

97 –2

00 4

C EO

p ow

er is

li nk

ed to

e ea

rly a

do pt

io n

PV SO

p la

ns , a

nd th

is is

str

en gt

he ne

d in

fa ce

o f

pu bl

ic p

ro te

st ar

ou nd

ec ut

iv e

co m

pe ns

at io

Lo gi

t, O

LS , S

U R

, P SM

, pr

op or

tio na

l h az

ar d

m od

C EO

p ow

er in

de x:

th e

nu m

- be

r o f b

oa rd

c om

m itt

ee s i

n w

hi ch

th e

C EO

h as

a ro

le ,

C EO

te nu

re , b

oa rd

si ze

, bo

ar d

in de

pe nd

en ce

, o w

n- er

sh ip

c on

ce nt

ra tio

n, a

in sti

tu tio

na l o

w ne

rs hi

p B

oy er

(2 00

5) Re

vi ew

o f fi

nd in

gs a

da ta

m os

tly fr

om th

e U

S an

d th

e U

19 90

s O

ve ra

ll, C

EO p

ow er

m ay

su lt

in in

cr ea

se d

C EO

m un

er at

io n

N /A

C ho

e et

a l.

(2 01

4) U

SA 19

99 –2

00 8

C EO

p ow

er re

su lts

hi gh

er to

ta l C

co m

pe ns

at io

n. H

ow ev

er ,

th e

str uc

tu re

o f t

he c

om -

pe ns

at io

n co

nt ra

ct , i

.e .,

ha vi

ng a

b in

di ng

sa la

ce ili

ng o

r n ot

, m at

te rs

O LS

, P oo

le d

O LS

B ar

ga in

in g

po w

er (C

PS ),

ra tio

(p ro

po rti

on o

f ex

ec ut

iv e

di re

ct or

s o n

th e

bo ar

d) , a

nd th

e tri

ni ty

ua lit

y/ tr

ia lit

1100 S. Brahma, F. Economou

1 3

Ta bl

e 4

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

C ye

rt et

a l.

(2 00

2) U

SA 19

92 –1

99 3

In ve

rs e

re la

tio ns

hi p

be tw

ee n

th e

la rg

es t

sh ar

eh ol

de r’s

o w

ne rs

hi p

an d

C EO

c on

tin ge

co m

pe ns

at io

n, w

hi le

EO d

ua lit

y is

p os

iti ve

as so

ci at

ed w

ith C

co m

pe ns

at io

n (a

ll ty

pe s)

. O

ve ra

ll, c

or po

ra te

-g ov

- er

na nc

e- re

la te

d va

ria bl

di sp

la y

as ym

m et

ric o

r ev

en o

pp os

in g

eff ec

on d

iv er

se ty

pe s o

f co

m pe

ns at

io n

(i. e.

, C EO

nu re

h as

a fa

vo ra

bl e

eff ec

t o n

ba se

sa la

an d

an a

dv er

se e

ffe ct

o n

eq ui

ty a

nd d

is cr

et io

na ry

m pe

ns at

io n)

H ec

km an

tw o-

ste p

C EO

c om

pe ns

at io

n (b

as e

sa la

ry , e

qu ity

c om

pe ns

a- tio

n, to

ta l c

on tin

ge nt

m pe

ns at

io n)

El ha

gr as

ey e

t a l.

(1 99

9) U

SA 19

85 O

ve ra

ll, C

EO p

ow er

(c ap

- tu

re d

by C

EO te

nu re

) h as

vo ra

bl e

im pa

ct o

n C

co m

pe ns

at io

n. C

te nu

re h

as a

st ro

ng er

eff

ec t o

n la

rg er

a nd

gh -p

er fo

rm in

g fir

m s,

w hi

le C

EO d

ua lit

y ha

s a

po si

tiv e

im pa

ct o

nl y

sm al

l a nd

lo w

-p er

fo rm

- in

g fir

m s

O LS

C EO

d ua

lit y,

C EO

te nu

1101CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 4

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

H en

de rs

on e

t a l.

(2 01

0) U

SA 20

05 W

he n

a fir

m e

xp er

ie nc

la yo

ffs , p

ow er

fu l C

EO s

ex pe

rie nc

e le

ss b

on us

du ct

io n

an d

a ris

e in

ui ty

c om

pe ns

at io

FE , H

ec km

an 2

st ep

, a nd

bs am

pl e

an al

ys is

C EO

p ow

er in

de x:

C EO

nu re

, C EO

d ua

lit y,

C PS

H ill

e t a

l. (2

01 6)

U SA

19 92

–2 00

8 Th

er e

is e

vi de

nc e

of e

xc es

- si

ve C

EO c

om pe

ns at

io n,

hi ch

c an

no t b

e ju

sti fie

d ba

se d

on e

co no

m ic

rm s,

on ly

fo r t

he m

os t

po w

er fu

l C EO

O LS

C EO

p ow

er in

de x

(th e

su m

3 d

um m

ie s,

fro m

0 to

: d ua

lit y,

te nu

re , a

pa y

sl ic

Jo ur

a et

a l.

(2 02

2) A

us tra

lia C

an ad

a, U

K , U

SA 20

12 –2

01 5

(A us

tra lia

a nd

an ad

a) ;

20 14

–2 01

6 (U

K );

20 11

–2 01

5 (U

SA )

Sh ar

eh ol

de r v

oi ce

c ou

al le

vi at

e th

e ga

p in

p ay

tw ee

n C

EO s a

nd o

th er

ec ut

iv es

, b ut

C EO

w er

m ea

su re

d by

PS in

cr ea

se s t

hi s g

w he

re as

C EO

d ua

lit y

m od

er at

es th

e ga

IV -G

M M

C PS

, C EO

d ua

lit y

1102 S. Brahma, F. Economou

1 3

Ta bl

e 4

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

K al

yt a

an d

M ag

na n

(2 00

8) C

an ad

a 19

97 –2

00 3

C EO

p ow

er is

li nk

ed to

th e

in ci

de nc

e an

d th

e m

ag -

ni tu

de o

f C EO

S ER

Ps .

Ex ce

pt io

na lly

h ig

h SE

R P

be ne

fit s t

he y

ea r b

ef or

e th

e C

EO re

tir es

O LS

w ith

ro bu

st H

ub er

– W

hi te

st an

da rd

e rr

or s

9 pr

ox ie

s o f C

EO p

ow er

: nu

m be

r o f d

ire ct

or s,

pr op

or tio

n of

u nr

el at

di re

ct or

s o n

th e

bo ar

bl oc

kh ol

de r (

at le

as t 1

0% ),

av er

ag e

un re

la te

d di

re ct

te nu

re , a

ve ra

ge u

nr el

at ed

re ct

or sh

ar e,

C EO

nu re

, C EO

sh ar

e, C

du al

ity , C

EO se

rv ed

o n

th e

bo ar

d be

fo re

a pp

oi nt

- m

en t

K al

yt a

(2 00

9) C

an ad

a 19

97 –2

00 5

C EO

p ow

er a

ffe ct

s t he

as t t

ra ns

pa re

nt c

om -

pe ns

at io

n co

m po

ne nt

ea su

re d

by S

ER P

be ne

fit s a

nd a

ls o

re du

ce s

R &

D e

xp en

di tu

re s f

th e

ye ar

s b ef

or e

th ei

r re

tir em

en t w

he n

SE R

P be

ne fit

s d ep

en d

on th

e fu

nc tio

ni ng

o f t

he fi

FE 8

va ria

bl es

to p

ro xy

C EO

w er

: b oa

rd si

ze , p

ro po

r- tio

n of

o ut

si de

d ire

ct or

s on

th e

bo ar

d, la

rg e

ou ts

id e

bl oc

kh ol

de r (

ow ns

a t

le as

t 1 0%

), C

EO d

ua lit

pr op

or tio

n of

fi rm

’s sh

ar es

ld b

y an

a ve

ra ge

o ut

si de

re ct

or , C

EO te

nu re

, C

EO se

rv ed

o n

th e

bo ar

d be

fo re

a pp

oi nt

m en

t, C

ow ne

rs hi

1103CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 4

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Lu o

(2 01

5) C

hi na

20 05

–2 01

2 O

ve ra

ll, th

e em

pi ric

re su

lts n

eg at

e m

an ag

e- ria

l p ow

er th

eo ry

. N o

ev id

en ce

th at

C EO

w er

c au

se s h

ig he

r C

EO c

om pe

ns at

io n

C hi

ne se

b an

ki ng

, u si

C EO

p ow

er p

ro xi

in di

vi du

al ly

o r t

he C

po w

er in

de x

FE p

an el

, 2 SL

S, G

M M

C EO

p ow

er in

de x

(a ve

ra ge

th e

fo ur

p ow

er p

ro xi

es ):

C EO

fo un

de r,

C EO

is a

ls o

an in

si de

r o n

th e

bo ar

C EO

d ua

lit y,

C EO

te nu

N tim

e t a

l. (2

01 9)

So ut

h A

fr ic

a 20

02 –2

01 2

PP S

in cr

ea se

s i n

fir m

s w

ith st

ro ng

g ov

er n-

an ce

, f ou

nd er

C EO

s, an

d C

EO s w

ith h

ig he

r ow

ne rs

hi p,

in de

pe nd

- en

t n om

in at

io n,

a nd

m un

er at

io n

co m

m it-

te es

a nd

le ss

er in

fi rm

s w

ith p

ow er

fu l C

EO s a

lo ng

-te nu

re C

EO s

FE , t

w o-

ste p

m ul

til ev

el ,

2S LS

C EO

a ge

, C EO

fo un

de r,

C PS

, C EO

te nu

re , C

ow ne

rs hi

p, C

EO d

ua lit

C EO

re pu

ta tio

Po llo

ck e

t a l.

(2 00

2) U

SA La

st si

x m

on th

s o f 1

99 8

A s t

he sp

re ad

b et

w ee

n ex

er ci

se p

ric e

an d

str ik

e pr

ic e

in cr

ea se

s, th

e ch

an ce

o f o

pt io

n re

pr ic

in g

in cr

ea se

s i n

th e

pr es

en ce

o f C

EO d

ua lit

y bu

t d ec

re as

es w

ith th

e ot

he r m

ea su

re s o

f C EO

w er

Lo gi

sti c

Pe rc

en ta

ge o

f v ot

in g

sh ar

ow ne

d by

C EO

s a nd

sti tu

tio na

l s ha

re ho

ld er

s, C

EO d

ua lit

y, n

o. o

f b oa

m em

be rs

a pp

oi nt

ed b

y C

EO , s

ta gg

er ed

b oa

1104 S. Brahma, F. Economou

1 3

Ta bl

e 4

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Ry an

a nd

W ig

gi ns

(2 00

4) U

SA 19

95 a

nd 1

99 7

Eq ui

ty -b

as ed

c om

pe ns

a- tio

n in

cr ea

se s w

ith

bo ar

d in

de pe

nd en

ce .

H ow

ev er

, e qu

ity -b

as ed

y de

cr ea

se s w

ith a

n in

cr ea

se in

C EO

p ow

U ni

va ria

te a

na ly

se s,

O LS

, To

bi t,

an d

Pr ob

it B

oa rd

si ze

, b oa

rd c

om po

si -

tio n,

C EO

te nu

re , d

ua lit

Ti an

a nd

Y an

g (2

01 4)

U SA

20 05

–2 01

0 B

an k

C EO

in ce

nt iv

e pa

y is

gh er

th an

th e

ju sti

fia bl

e po

rti on

a nd

is a

ss oc

ia te

d w

ith h

ig he

r C EO

p ow

er .

So m

e in

di ca

tio ns

a re

th at

gh er

C EO

p ow

er is

lin

ke d

to C

EO in

ce nt

iv e

pa y

sw itc

he s

O LS

, L og

ist ic

C PS

, C EO

d ua

lit y,

C EO

ne rs

hi p,

C EO

e nt

re nc

h- m

en t (

C EO

e qu

ity o

w ne

r- sh

ip d

iv id

ed b

y th

e m

ar ke

t va

lu e

of th

e fir

m )

W es

tp ha

l a nd

Z aj

ac (1

99 5)

U SA

19 87

–1 99

0 C

EO p

ow er

p os

iti ve

re la

te s t

o C

EO -n

ew -

di re

ct or

d em

og ra

ph ic

m ila

rit y,

a nd

th e

gr ea

te r d

em og

ra ph

re se

m bl

an ce

b et

w ee

n th

e C

EO a

nd th

e bo

ar d

lin ke

d to

m or

e fa

vo ra

bl e

C EO

c om

pe ns

at io

M ax

im um

li ke

lih oo

d lo

gi t,

2S G

LS C

EO d

ua lit

y, C

EO te

nu re

1105CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 4

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Zh u

et a

l. (2

02 1)

C hi

na 20

09 –2

01 8

G re

at er

C EO

p ow

er is

so ci

at ed

w ith

h ig

he r

C EO

c om

pe ns

at io

n, b

th is

is w

ea ke

ne d

by th

e C

ha ir-

C EO

a ge

g ap

. G

re at

er C

EO p

ow er

su lts

in a

w id

er p

ay g

w ith

th e

ot he

r e xe

cu tiv

FE C

EO p

ow er

in de

x is

b as

on 7

v ar

ia bl

es - d

ua lit

sh ar

eh ol

di ng

, t en

ur e,

uc at

io n,

re la

tiv es

in th

e bo

ar d,

p ol

iti ca

l c on

ne c-

tio n,

a nd

b oa

rd in

de -

pe nd

en ce

. 3 a

lte rn

at iv

e va

ria bl

es fo

r C EO

p ow

er :

1. D

um m

y va

ria bl

e C

du al

ity , f

ou nd

er , o

r t he

ly in

si de

r, 2.

D um

m y

va ria

bl e

C EO

d ua

lit y,

un de

r, a

gr ad

ua te

o f e

lit e

ed uc

at io

n or

h as

o w

ne r-

sh ip

, 3 . D

um m

y va

ria bl

e C

EO d

ua lit

y. C

EO te

nu re

d C

EO fo

un de

r a re

a ls

o us

ed in

di vi

du al

Th is

T ab

le sh

ow s a

ll th

e stu

di es

re la

te d

to C

EO p

ow er

a nd

e xe

cu tiv

e co

m pe

ns at

io n

1106 S. Brahma, F. Economou

1 3

Ta bl

e 5

C EO

p ow

er a

nd fi

rm ri

sk -ta

ki ng

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

- ye

ar o

bs er

va -

tio n

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

A l-D

ha m

ar i e

t a l.

(2 02

2) M

al ay

si a

20 13

–2 01

5 O

ve rla

p be

tw ee

n au

di t a

re m

un er

at io

n co

m m

itt ee

s re

du ce

s t he

c os

t o f d

eb t,

bu t

th e

pr es

en ce

o f p

ow er

fu l

C EO

s i nc

re as

es th

e co

st of

Re gr

es si

on , l

ag ge

d re

gr es

si on

C EO

p ow

er in

de x:

D ua

lit y,

ne rs

hi p,

in de

pe nd

en t d

ire c-

to rs

, C EO

fo un

de r,

C EO

fa m

ily

m em

be r,

C EO

te nu

re , C

pr om

in en

ce m

ea su

re d

by h

on -

or ifi

c tit

le h

el d

by th

e C

EO A

ltu nb

as e

t a l.

(2 02

0) U

SA 19

98 –2

01 5

B an

k ris

k- ta

ki ng

in cr

ea se

s w ith

EO p

ow er

a nd

p oo

r b al

an ce

ee t

FE , G

M M

C EO

p ow

er in

de x:

C EO

te nu

re ,

C EO

d ua

lit y,

C EO

o w

ne rs

hi p,

EO n

et w

or k

si ze

C hi

nt ra

ka rn

e t a

l. (2

01 5)

U SA

19 92

–2 01

2 C

EO p

ow er

n ee

ds to

b e

si gn

ifi -

ca nt

ly h

ig h

to in

cr ea

se fi

ris k-

ta ki

FE , 2

SL S

C PS

H ai

de r a

nd F

an g

(2 01

8) C

hi na

20 08

–2 01

3 C

EO p

ow er

is n

eg at

iv el

y re

la te

d to

fi rm

ri sk

-ta ki

ng , b

ut la

rg e

sh ar

eh ol

de rs

m od

er at

e it.

T he

eff

ec ts

fo r l

ar ge

sh ar

eh ol

de rs

e di

ffe re

nt b

et w

ee n

SO E

an d

no n-

SO E

FE , G

M M

C EO

p ow

er in

de x:

C EO

d ua

lit y,

si de

d ire

ct or

, C EO

o w

ne rs

hi p,

sti tu

tio na

l s ha

re , c

er tifi

ca te

, C

EO te

nu re

, C EO

e du

ca tio

ou ts

id e

di re

ct or

sh ip

, a ge

, C EO

nd er

H ua

ng a

nd G

ao (2

02 2)

C hi

na 20

08 –2

01 8

C EO

fo rm

al p

ow er

in cr

ea se

s fir

m s’

d eb

t p ol

ic y

pe rs

ist en

ce ,

w hi

le C

EO in

fo rm

al p

ow er

du ce

s i t,

an d

th e

eff ec

t o f

fo rm

al p

ow er

is st

ro ng

er th

in fo

rm al

p ow

O LS

, q ua

nt ile

re gr

es si

on C

EO p

ow er

in de

x of

fo rm

al a

in fo

rm al

p ow

er : C

EO d

ua lit

C EO

te nu

re , C

EO o

w ne

rs hi

C EO

fo un

de r,

fin an

ce e

xp er

t po

w er

, C EO

o ut

si de

d ire

ct or

- sh

ip , C

EO h

ol di

ng a

ca de

m ic

si tio

1107CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 5

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

- ye

ar o

bs er

va -

tio n

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

K or

ke am

ak i e

t a l.

(2 01

7) Fi

nl an

d 20

02 –2

00 5

C EO

in di

vi du

al le

ve ra

ge is

si tiv

el y

re la

te d

to fi

le ve

ra ge

fo r C

EO s c

ha ra

ct er

- iz

ed b

y le

ng th

ie r t

en ur

e an

d C

EO -c

ha ir

du al

ity b

ut n

ot fo

r C

EO s w

ith h

ig he

r o w

ne rs

hi p

in th

e fir

O LS

C EO

d ua

lit y

an d

te nu

Le w

el ly

n an

d M

ul le

r-K ah

(2 01

2) U

SA 19

97 –2

00 5

Fi rm

e xc

es si

ve ri

sk -ta

ki ng

as so

ci at

ed w

ith h

ig he

r C EO

w er

, w hi

ch is

a ttr

ib ut

ed to

w er

fu l C

EO s’

te nd

en cy

fo cu

s o nl

y on

th e

po si

tiv es

d ig

no re

th e

ne ga

tiv e

co ns

e- qu

en ce

s o f r

is k-

ta ki

Lo gi

sti c

re gr

es si

on C

EO d

ua lit

y, b

oa rd

in de

pe nd

- en

ce , i

ns tit

ut io

na l o

w ne

rs hi

C EO

o w

ne rs

hi p,

C EO

te nu

re ,

ou ts

id e

di re

ct or

’s te

nu re

, o ut

- si

de r o

w ne

rs hi

Pa th

an (2

00 9)

U SA

19 97

–2 00

4 B

an k

ris k-

ta ki

ng is

n eg

at iv

el y

aff ec

te d

by C

EO p

ow er

a nd

si tiv

el y

aff ec

te d

by st

ro ng

ar ds

G LS

R E,

3 SL

S, tw

o ste

p G

M M

, G

le js

er C

EO d

ua lit

y, C

EO in

te rn

al ly

re d

Po ur

e t a

l. (2

02 3)

M ul

tip le

c ou

nt rie

s 19

99 –2

01 3

La rg

e ba

nk s’

ri sk

-ta ki

ng st

ra te

- gi

es a

re sw

ay ed

b y

na tio

na l

cu ltu

re a

nd C

EO p

ow er

G LS

R E,

tw o-

ste p

sy ste

G M

M , I

V 2

SL S

C EO

p ow

er in

de x:

C EO

fo un

de r,

C EO

in si

de r,

C EO

d ua

lit y

Sh ab

ir et

a l.

(2 02

3) 19

c ou

nt rie

s 20

09 –2

02 0

Ec on

om ic

a nd

g eo

po lit

ic al

ce rta

in ty

a dv

er se

ly a

ffe ct

s ba

nk ri

sk , b

ut th

is is

m od

er -

at ed

b y

C EO

p ow

FE , 2

SL S,

tw o-

ste p

sy ste

G M

M C

EO p

ow er

in de

x: C

EO d

ua lit

C EO

fo un

de r,

C EO

o w

ne rs

hi p,

EO te

nu re

1108 S. Brahma, F. Economou

1 3

Ta bl

e 5

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

- ye

ar o

bs er

va -

tio n

M ai

n fin

di ng

s M

et ho

do lo

gy M

ea su

re s o

f C EO

P ow

Sh ei

kh (2

01 9b

) U

SA 19

92 –2

01 5

Fi rm

to ta

l r is

k an

d id

io sy

nc ra

tic

ris k

is p

os iti

ve ly

a ffe

ct ed

b y

C EO

p ow

er w

he n

th er

e is

str

on g

co rp

or at

e go

ve rn

an ce

d pr

od uc

t m ar

ke t c

om pe

ti- tio

FE , I

V- G

M M

C EO

p ow

er in

de x:

C EO

d ua

lit y/

tri

al ity

, f ou

nd er

, p ay

sl ic

bo ar

d in

de pe

nd en

ce , C

te nu

re , f

ou nd

in g

fa m

ily

Ta n

an d

Li u

(2 01

6) A

us tra

lia 20

04 –2

01 3

Id io

sy nc

ra tic

v ol

at ili

ty is

n eg

a- tiv

el y

re la

te d

to C

EO p

ow er

G M

M C

EO p

ow er

in de

x: C

EO is

C FO

, C

EO in

a ud

it, re

m un

er at

io n

an d

no m

in at

io n

co m

m itt

ee , e

xe cu

- tiv

e di

re ct

or ra

tio , i

nd ep

en de

di re

ct or

ra tio

Zh ao

e t a

l. (2

02 3)

C hi

na 20

11 –2

01 8

ES G

p er

fo rm

an ce

re du

ce s fi

ris k-

ta ki

ng , a

nd p

ow er

fu l

C EO

s s tre

ng th

en th

O LS

, H ec

km an

, D iD

re gr

es -

si on

, I V

re gr

es si

on C

EO d

ua lit

y, d

eg re

e of

e qu

ity

di sp

er si

Zo u

et a

l. (2

02 1)

C hi

na 20

09 –2

01 4

C EO

o w

ne rs

hi p

an d

fo un

de r

st at

us a

re p

os iti

ve ly

re la

te d

fir m

ri sk

, w hi

le C

EO te

nu re

s a n

eg at

iv e

re la

tio ns

hi p

w ith

fi rm

ri sk

. C or

po ra

so ci

al re

sp on

si bi

lit y

ha s a

ed ia

tin g

ro le

To bi

t, m

ul tip

le li

ne ar

re gr

es si

m od

el C

EO p

ow er

in de

x: C

EO d

ua lit

C EO

o w

ne rs

hi p,

C EO

fo un

de r

st at

us , C

EO te

nu re

, C EO

so ci

tie s (

th e

nu m

be r o

f o ut

si de

c or

- po

ra te

b oa

rd s t

he C

EO se

rv ed

), C

EO ’s

e du

ca tio

na l l

ev el

Th is

T ab

le sh

ow s a

ll th

e stu

di es

re la

te d

to C

EO p

ow er

a nd

fi rm

ri sk

-ta ki

1109CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 6

C EO

p ow

er a

nd c

or po

ra te

st ra

te gi

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

A l-S

ha er

e t a

l. (2

02 3)

U K

20 11

–2 01

9 N

ew ly

a pp

oi nt

ed C

EO s

pu rs

ue e

nv iro

nm en

ta l

po lic

ie s,

w hi

le C

EO s w

ith

gr ea

te r m

an ag

er ia

l p ow

ta ke

le ss

e nv

iro nm

en ta

l in

iti at

iv es

, a nd

th is

m or

e pr

on ou

nc ed

in th

e pr

es en

ce o

f i nd

ep en

de nt

re ct

or s.

Th es

e bu

si ne

ss es

e no

t l os

s- m

ak in

g an

d op

er at

e in

se ct

or s s

en si

tiv e

to e

nv iro

nm en

ta l i

ss ue

O LS

, G M

M , 2

SL S

w ith

IV ,

PS M

, H ec

km an

tw o-

st ag

e es

tim at

io n

Tw o

po w

er in

de xe

s: M

an ag

e- ria

l p ow

er (C

EO d

ua lit

pr es

en ce

o f e

xe cu

tiv e

di re

c- to

rs ) a

nd le

gi tim

at e

po w

(C EO

te nu

re )

B ak

er e

t a l.

(2 01

9) U

SA 19

92 –2

01 0

Th e

sc al

e of

e ar

ni ng

s m an

- ag

em en

t i s r

el ia

nt o

n th

e re

la tiv

e po

w er

o f t

he C

in c

om pa

ris on

w ith

C FO

O LS

C EO

p ow

er in

de x:

d ua

lit y

an d

ce nt

ra lit

y (th

e C

EO ’s

p ay

ar e

is in

th e

to p

qu ar

til e

th e

sa m

pl e)

B al

de ni

us e

t a l.

(2 01

4) N

A N

A Sh

ar eh

ol de

rs te

nd to

m in

at e

ad vi

so r-h

ea vy

ar d

w he

re as

p ow

er fu

l C

EO s n

om in

at e

m on

ito r-

he av

y bo

ar ds

to p

re ve

in fo

rm at

io n

fro m

fl ow

in g

to sh

ar eh

ol de

Th eo

re tic

al st

ud y

N A

B al

m ac

ed a

(2 00

9) N

A N

A Po

w er

fu l C

EO s o

f a cq

ui re

r fir

m s u

se th

ei r n

et w

or k

to a

cc es

s i nf

or m

at io

n of

rg et

fi rm

s t o

ga ug

e th

e la

tte rs

’ v al

Th eo

re tic

al st

ud y

N A

1110 S. Brahma, F. Economou

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

B ig

le y

an d

W ie

rs em

a (2

00 2)

U SA

19 90

–1 99

4 C

EO p

ow er

is n

eg at

iv el

y re

la te

d to

re fo

cu si

co rp

or at

e str

at eg

ie s a

s he

ir ap

pa re

nt e

xp er

ie nc

e in

cr ea

se s.

H ow

ev er

, t hi

s re

su lt

is re

ve rs

ed w

he n

C EO

p ow

er is

m ea

su re

d by

n um

be r o

f o ut

si de

re ct

or sh

ip s

H ie

ra rc

hi ch

al m

od el

re gr

es -

si on

a na

ly si

s N

o. o

f t itl

es (d

ua lit

y, tr

ia l-

ity ),

co m

pe ns

at io

n, st

oc k

ow ne

rs hi

p, fa

m ily

li nk

ed to

un de

rs , f

un ct

io na

l e xp

er -

tis e,

e lit

e ed

uc at

io n,

o ut

si de

re ct

or sh

B re

ue r e

t a l.

(2 02

2) 40

c ou

nt rie

s 20

02 –2

01 7

Po w

er fu

l C EO

s e ng

ag e

ex ce

ss iv

e C

SR st

ra te

gi es

o bt

ai n

re pu

ta tio

na l g

ai ns

at le

ad to

a fa

ll in

fi rm

lu e

O LS

C EO

p ow

er in

de x:

C EO

al ity

a nd

C EO

im po

rta nc

e m

ea su

re d

by th

e C

EO b

ei ng

e on

ly in

si de

B ris

ty e

t a l.

(2 02

2) U

SA 19

96 –2

01 6

C EO

p ow

er is

n eg

at iv

el y

re la

te d

to la

bo r-f

rie nd

po lic

y w

ith ou

t i m

pa ct

in g

fir m

v al

ue . P

ow er

fu l C

EO s

in ve

st m

or e

in la

bo r-

fr ie

nd ly

p ro

gr am

s w he

n th

e m

ar ke

t i s c

om pe

tit iv

in no

va tio

n- in

te ns

iv e

fir m

s, an

d un

io n-

in te

ns iv

e in

du s-

tri es

, r es

ul tin

g in

h ig

he r

fir m

v al

O LS

, 2 SL

S, D

iD C

EO p

ow er

in de

x: fo

un de

r, du

al ity

, t ria

lit y,

C EO

w ne

rs hi

p, C

EO T

en ur

de pe

nd en

cy ra

tio C

EO p

ow er

in de

x an

d C

ab ov

e th

e in

du str

y m

ed ia

n fo

r r ob

us tn

es s

B ro

dm an

n et

a l.

(2 02

1) U

SA 20

03 –2

01 7

C EO

p ow

er n

eg at

iv el

y aff

ec ts

c or

po ra

te se

xu al

ie nt

at io

n an

d eq

ua lit

y po

lic ie

O LS

C EO

p ow

er in

de x:

H ig

h C

PS ,

Lo ng

C EO

T en

ur e,

C EO

/ C

ha ir,

D ua

lit y,

H ig

h bo

ar d

C oo

pt io

n, F

ou nd

er C

1111CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

B ro

dm an

n et

a l.

(2 02

2) U

SA 20

03 –2

01 7

C EO

p ow

er h

as a

p os

iti ve

so ci

at io

n w

ith b

oa rd

nd er

d iv

er si

ty , a

nd th

is m

os t e

ffe ct

iv e

in th

e pr

es en

ce o

f y ou

ng er

a nd

rg er

b oa

rd s

En tro

py b

al an

ci ng

, 2 SL

le ad

la g

sp ec

ifi ca

tio n,

M M

C EO

p ow

er in

de x:

C EO

d ua

l- ity

, C EO

fo un

de r,

C PS

, l on

g te

nu re

, h ig

h en

tre nc

hm en

C an

ne lla

a nd

S he

n (2

00 1)

U SA

19 86

–1 99

1 Po

w er

fu l C

EO s a

nd o

ut si

di re

ct or

s p la

y a

si gn

ifi ca

ro le

in h

ei r a

pp ar

en t a

ex it.

O ut

si de

d ire

ct or

s su

pp or

t t he

h ei

r a pp

ar en

t an

d pr

ev en

t C EO

s f ro

ex pl

oi tin

g po

w er

in fi

rm s

ch ar

ac te

riz ed

b y

hi gh

p er

- fo

rm an

ce , w

he re

as o

ut si

di re

ct or

s u nd

er ta

ke th

e ex

it of

h ei

r a pp

ar en

t t o

st al

l t he

w er

o f i

nc um

be nt

C EO

s in

fi rm

s c ha

ra ct

er iz

ed b

y lo

w p

er fo

rm an

M ul

tin om

ia l l

og ist

ic re

gr es

- si

on C

EO p

ow er

in de

x: C

ow ne

rs hi

p, C

EO d

ua lit

y, a

C EO

te nu

C he

n (2

01 4)

Ta iw

an 20

07 –2

01 0

B oa

rd c

ap ita

l p os

iti ve

aff ec

ts R

& D

in no

va tio

an d

C EO

p ow

er m

od er

at es

is re

la tio

ns hi

La gg

ed in

de pe

nd en

t, FE

C EO

p ow

er in

de x:

C EO

al ity

, t he

ra tio

o f s

ha re

s he

ld b

y th

e C

EO to

d ire

ct or

ne rs

hi p,

p ro

po rti

on o

f no

n- in

de pe

nd en

t d ire

ct or

s, pr

op or

tio n

of d

ire ct

or s w

w er

e ap

po in

te d

af te

r t he

EO b

eg an

h is

o r h

er te

nu re

1112 S. Brahma, F. Economou

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

C hi

kh a

nd F

ilb ie

n (2

01 1)

Fr an

ce 20

00 –2

00 5

C EO

s w ith

st ro

ng n

et w

or k

po w

er w

ou ld

u nd

er ta

M &

A d

es pi

te th

e ne

ga tiv

e m

ar ke

t r ea

ct io

n to

th e

ac qu

is iti

on a

nn ou

nc em

en t

U ni

va ria

te a

na ly

si s,

lo gi

sti c

re gr

es si

on C

EO d

ua lit

y, C

EO o

w ne

r- sh

ip , C

EO fo

un de

r, C

ac qu

is iti

on e

xp er

ie nc

e, C

di re

ct or

sh ip

, C EO

e du

ca tio

C hi

nt ra

ka rn

e t a

l. (2

01 4)

U SA

19 92

–2 01

0 Po

w er

fu l C

EO p

er ce

iv es

ve ra

ge n

eg at

iv el

y, a

C EO

s e m

br ac

e su

b- op

tim al

le ve

ra ge

a fte

r c on

- so

lid at

io n

of th

ei r p

ow er

. W

ea k

C EO

s d o

no t s

aw ay

fr om

h ig

h le

ve ra

Po ol

ed O

LS , F

E, F

E 2S

LS C

C hi

nt ra

ka rn

e t a

l. (2

01 8)

U SA

19 92

–2 01

0 A

n in

cr ea

se in

C EO

p ow

by o

ne st

an da

rd d

ev ia

- tio

n le

ad s t

o a

fa ll

in th

e pr

ob ab

ili ty

o f d

iv id

en d

pa ym

en ts

, a nd

fo r fi

rm s

pa yi

ng d

iv id

en ds

, i t l

ea ds

a fa

ll in

th e

si ze

o f

di vi

de nd

p ay

ou ts

Lo gi

t, O

LS , F

E, T

ob it,

tw o

st ag

e pr

ob it,

tw o

st ag

e to

bi t

C PS

C om

bs e

t a l.

(2 00

7) U

SA 19

78 –2

00 1

Sh ar

e pr

ic e

in cr

ea se

d (d

ec re

as ed

) f ol

lo w

in g

th e

de at

h of

h ig

h (lo

w )

po w

er ed

C EO

s w he

n bo

ar d

in de

pe nd

en ce

is lo

w ,

an d

sh ar

e pr

ic e

de cr

ea se

d (in

cr ea

se d)

fo llo

w in

g th

e de

at h

of h

ig h

(lo w

) p ow

- er

ed C

EO s w

he n

bo ar

d in

de pe

nd en

ce is

h ig

Ev en

t s tu

dy o

f C EO

d ea

th s

an d

m od

er at

ed re

gr es

si on

C EO

te nu

re , C

EO o

w ne

rs hi

C EO

d ua

lit y

1113CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

D eB

os ke

y et

a l.

(2 01

9) U

SA 20

08 –2

01 3

Po w

er fu

l C EO

s m ea

su re

d by

te nu

re a

nd d

ua lit

y po

si tiv

el y

in flu

en ce

e ar

n- in

gs a

nn ou

nc em

en t t

on e.

is e

ffe ct

is m

od er

at ed

b y

bo ar

d ov

er si

gh t o

nl y

w he

n C

EO te

nu re

is w

ea ke

r, bu

t no

t f or

d ua

l-r ol

e C

EO s

U ni

va ria

te a

na ly

si s a

nd F

E C

EO te

nu re

a nd

C EO

d ua

lit y

D ow

el l e

t a l.

(2 01

1) U

SA 19

96 –1

99 9

Po w

er fu

l C EO

s a nd

sm al

le r,

m or

e in

de pe

nd en

t b oa

rd s

ar e

eff ec

tiv e

in m

ak in

g fa

ste r d

ec is

io ns

fo r fi

rm s

go in

g th

ro ug

h fin

an ci

di str

es s

Lo g-

lik el

ih oo

d re

gr es

si on

C EO

p ow

er in

de x:

C EO

al ity

, C EO

fo un

de r,

C EO

ne rs

hi p,

e lit

e ed

uc at

io n

D ut

ta e

t a l.

(2 01

1) C

an ad

a 19

97 –2

00 5

C EO

p ow

er d

oe s n

ot le

ad to

or a

cq ui

si tio

ns . C

EO s

w ith

h ig

he r r

el at

iv e

po w

m ak

e m

or e

ac qu

is iti

on s

U ni

va ria

te a

na ly

si s a

lo gi

sti c

re gr

es si

on C

EO e

xc es

s p ay

Fa hl

en br

ac h

(2 00

9) U

SA 19

92 –2

00 2

In ve

stm en

t i n

fir m

s w ith

un de

r C EO

s l ea

ds to

si tiv

e ex

ce ss

re tu

rn s

co m

pa re

d to

fi rm

s w ith

cc es

so r C

EO s,

w hi

ch is

bu st

af te

r a dj

us tin

g fo

r di

ffe re

nt fi

rm c

ha ra

ct er

- ist

ic s

IV , 2

SL S

IV C

EO fo

un de

1114 S. Brahma, F. Economou

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Fr al

ic h

an d

Pa pa

do po

ul os

01 8)

U SA

20 05

–2 01

0 C

EO p

ow er

w ill

le ad

lo w

er b

id p

re m

iu m

s a s

th es

e C

EO s a

re b

et te

r pr

ep ar

ed to

m an

ag e

hi gh

in fo

rm at

io n

as ym

m et

fro m

th ei

r r is

k- av

er se

tu re

o r b

et te

r e va

lu at

io n

of th

e qu

al ity

o f t

he ta

rg et

O LS

C EO

p ow

er in

de x:

C EO

al ity

, C EO

o w

ne rs

hi p,

EO p

re sti

ge (m

ea su

re d

ou ts

id e

di re

ct or

sh ip

, n um

be r

of n

on -p

ro fit

b oa

rd d

ire ct

or -

sh ip

s, re

la tiv

e pr

es tig

e of

fir

m s w

he re

C EO

si ts

), an

d C

EO e

xp er

t m ea

su re

d by

th e

nu m

be r o

f y ea

rs th

e C

w or

ke d

in th

e fir

m in

d iff

er -

en t r

ol es

G ra

ha m

e t a

l. (2

02 0)

U SA

19 18

–2 01

1 B

oa rd

in de

pe nd

en ce

in ve

rs el

y re

la te

d to

C EO

nu re

, a nd

th is

re la

tio n

ap pe

ar s w

ea ke

r u nd

un ce

rta in

O LS

, I V

C EO

te nu

G re

ve a

nd M

its uh

as hi

00 7)

Ja pa

n 19

75 –1

99 6

C EO

te nu

re is

e ffe

ct iv

e in

ve rs

ifi ca

tio n

str at

eg ie

s an

d re

ve rs

in g

su ch

st ra

te -

gi es

, b ut

th e

pr op

or tio

n of

ec ut

iv es

a pp

oi nt

ed b

y C

EO s i

s i ne

ffe ct

iv e

Fe as

ib le

g en

er al

le as

t sq

ua re

s Fo

rm al

p ow

er (C

EO te

nu re

) an

d in

fo rm

al p

ow er

(p ro

po r-

tio n

of e

xe cu

tiv es

in T

M Ts

po in

te d

by C

EO )

H ar

pe r a

nd S

un (2

01 9)

U SA

19 91

–2 01

4 C

EO p

ow er

n eg

at iv

el y

in flu

- en

ce s fi

rm s’

C SR

a ct

iv i-

tie s,

an d

fe m

al e

C EO

s a re

or e

en ga

ge d

in C

SR th

th ei

r m al

e co

un te

rp ar

FE , 2

SL S

C PS

, m an

ag er

ia l a

bi lit

y (ro

bu stn

es s t

es t)

1115CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

H ar

pe r e

t a l.

(2 02

0) U

SA 20

01 –2

01 4

C EO

p ow

er is

m in

im iz

af te

r t he

st oc

k pr

ic e

cr as

an d

fe m

al e

C EO

s s ee

si gn

ifi ca

nt re

du ct

io n

po w

er c

om pa

re d

to m

al e

C EO

s f ol

lo w

in g

th e

cr as

O LS

, F E,

F am

a– M

ac B

et h,

bi t,

C PS

, l og

C EO

p ay

(r ob

us tn

es s

te st)

, a nd

lo g

(C EO

p ay

- m

ed ia

n V

P pa

y) (r

ob us

tn es

s te

st)

H ay

ne s a

nd H

ill m

an (2

01 0)

U SA

19 98

–2 00

2 C

EO p

ow er

re str

ai ns

e in

flu en

ce o

f b oa

ca pi

ta l b

re ad

th o

n a

fir m

’s

pl an

ne d

ch an

ge a

nd h

el ps

ai nt

ai n

th e

st at

us q

M od

er at

ed re

gr es

si on

al ys

is C

EO p

ow er

in de

x: C

du al

ity , b

oa rd

in de

pe nd

en ce

, pr

op or

tio n

of C

EO to

b oa

eq ui

ty h

ol di

ng s,

pr op

or tio

n of

d ire

ct or

s a pp

oi nt

ed b

y th

e C

EO H

or ne

r a nd

V al

en ti

(2 01

2) U

SA 20

02 –2

00 7

W he

n ou

ts id

e C

EO s h

av e

pr io

r c ha

ir ex

pe rie

nc e,

ey ta

ke u

p C

EO d

ua lit

y ro

le s i

n th

e ne

w fi

rm ,

w he

re as

p ow

er fu

l i nc

um -

be nt

C EO

s m ea

su re

d by

nu re

w ou

ld p

re ve

nt th

e ne

w C

EO s f

ro m

ta ki

ng u

p C

EO -c

ha ir

du al

ro le

B in

ar y

lo gi

sti c

re gr

es si

on O

ut go

in g

C EO

te nu

re , o

ut go

- in

g C

EO d

ua lit

y, o

ut si

C EO

h el

d C

EO d

ua lit

y ro

le ,

ou ts

id e

C EO

w as

C EO

th e

pr ev

io us

fi rm

, o ut

si de

re ct

or sh

Ja ro

en jit

rk am

e t a

l. (2

02 0)

U SA

19 92

–2 01

6 Pr

od uc

t m ar

ke t c

om pe

tit io

n lo

w er

s C EO

p ow

er , w

hi ch

h ig

he r i

n fir

m s w

ith

en tre

nc he

d m

an ag

em en

IV , 2

SL S,

P SM

-D iD

C PS

, C EO

p ay

g ap

, C EO

al ity

, C EO

te nu

re , h

ig h

C EO

o w

ne rs

hi p

1116 S. Brahma, F. Economou

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Jia e

t a l.

(2 02

2) C

hi na

20 09

–2 01

9 C

EO st

ru ct

ur al

p ow

er le

ad s

to lo

w er

C SR

p ra

ct ic

es ,

w hi

le C

EO e

xp er

t p ow

ha s a

fa vo

ra bl

e eff

ec t o

n C

SR p

ra ct

ic es

, a nd

C EO

ne rs

hi p

an d

pr es

tig e

do n

ot e

xe rt

an y

im pa

on C

SR in

iti at

iv es

, a nd

is is

m od

er at

ed b

y fir

vi si

bi lit

FE C

EO p

ow er

in de

x: C

EO d

ua l-

ity , C

EO e

qu ity

o w

ne rs

hi p,

m be

r o f f

un ct

io na

l a re

se rv

ed , n

um be

r o f o

ut si

pu bl

ic b

oa rd

s s er

ve d

Jir ap

or n

et a

l. (2

01 2)

U SA

19 92

–2 00

4 Po

w er

fu l C

EO s t

ak e

su bs

ta nt

ia lly

lo w

er le

ve r-

ag e

to e

va de

d is

ci pl

in ar

y pr

oc es

se s c

on ce

rn in

g de

bt -

fin an

ci ng

O LS

, F E,

2 SL

S C

Jo se

ph e

t a l.

(2 01

4) U

SA 19

81 –2

00 7

Th e

C EO

-o nl

y str

uc tu

re is

ev al

en t i

n fir

m s w

ith

hi gh

er in

si de

rs , a

nd p

ow er

- fu

l C EO

s u se

th is

st ru

ct ur

e to

re m

ov e

in si

de rs

w ho

sa gr

ee w

ith th

ei r d

ec i-

si on

Re gr

es si

on C

EO d

ua lit

y, C

EO fu

nc tio

na l

(fi na

nc e)

b ac

kg ro

un d,

a nd

EO o

w ne

rs hi

K im

e t a

l. (2

01 7)

U SA

20 03

–2 01

0 H

av in

g ac

co un

tin g

ex pe

rts

on th

e au

di t c

om m

itt ee

ad s t

o a

de ta

ile d

au di

tin g

pr oc

es s,

bu t a

p ow

er fu

l C

EO im

pe de

s t hi

O LS

, F am

a– M

ac be

th ,

Lo gi

sti c,

H ec

km an

tw o-

st ag

C EO

te nu

re a

nd C

EO d

ua lit

y (s

im ul

ta ne

ou sly

)

1117CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

K ra

us e

et a

l. (2

01 6)

U SA

20 03

–2 01

2 C

us to

m er

s o f fi

rm s o

pe ra

t- in

g in

h ig

h po

w er

d ist

an ce

ltu re

s c on

si de

r i nc

re as

C EO

p ow

er le

gi tim

at e,

hi ch

is m

or e

pr on

ou nc

fo r fi

rm s t

ha t r

el y

on th

ei r

cu sto

m er

G en

er al

iz ed

e sti

m at

in g

eq ua

tio n

C EO

p ow

er in

de x:

C EO

d ua

l- ity

, p ro

po rti

on o

f i nd

ep en

d- en

t d ire

ct or

s a nd

C EO

ne rs

hi p

Le w

el ly

n an

d Fa

in sh

m id

t (2

01 7)

U SA

20 06

–2 00

7 C

EO d

ua lit

y is

c om

bi ne

d in

to p

ow er

b un

dl es

w ith

ga ni

za tio

na l a

nd in

du str

y di

sc re

tio ns

to e

vo lv

e as

ur e

ffe ct

iv e

an d

fo ur

eff ec

tiv e

go ve

rn an

str uc

tu re

N ec

es si

ty a

na ly

si s,

O LS

C EO

d ua

lit y,

C EO

te nu

re ,

C EO

o w

ne rs

hi p,

C EO

si de

Li si

c et

a l.

(2 01

6) U

SA 20

04 –2

01 0

Ex pe

rt au

di t c

om m

itt ee

s d o

no t a

lw ay

s l ea

d to

e ffe

ct iv

e m

on ito

rin g.

T he

e ffe

ct iv

e m

on ito

rin g

by a

ud it

co m

- m

itt ee

s i s c

on tin

ge nt

o n

C EO

p ow

Lo gi

t r eg

re ss

io n

C EO

p ow

er in

de x:

C EO

al ity

, C EO

fo un

de r,

C EO

la tiv

e co

m pe

ns at

io n,

C EO

ne rs

hi p

Li e

t a l.

(2 01

6) U

K 19

98 –2

01 3

C EO

p ow

er re

du ce

s fi rm

s’

C SR

e ve

nt s i

n te

rm s o

f t he

lu m

e of

C SR

e ve

nt s

U ni

va ria

te a

na ly

si s,

O LS

C EO

d ua

lit y,

C PS

, a nd

C EO

nu re

Li u

an d

Jir ap

or n

(2 01

0) U

SA 19

93 –2

00 6

C EO

p ow

er le

ad s t

o hi

gh er

nd ra

tin gs

a s b

on dh

ol d-

er s p

er ce

iv e

th at

C EO

w er

is a

ss oc

ia te

d w

ith

as ym

m et

ric in

fo rm

at io

O LS

, 2 SL

S C

1118 S. Brahma, F. Economou

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Lo a

nd S

hi ah

-H ou

(2 02

2) U

SA 20

00 –2

01 5

C EO

p ow

er is

in ve

rs el

y lin

ke d

to fi

rm o

ve rin

ve st-

m en

t, an

d th

is is

a ttr

ib ut

to C

EO s’

ri sk

av er

si on

a nd

ili ty

to m

ak e

in ve

stm en

t de

ci si

on s p

ru de

nt ly

FE , O

LS , L

og ist

ic re

gr es

- si

on C

EO p

ow er

in de

x: C

PS ,

du al

ity , f

ou nd

er , t

en ur

sto ck

o w

ne rs

hi p,

n um

be r o

f ex

ec ut

iv e

ro le

s h el

d in

th e

fir m

b ef

or e

C EO

, n um

be r

of y

ea rs

in o

th er

e xe

cu tiv

e ro

le s

M as

w ad

i a nd

A m

ra n

(2 02

3) Sa

ud i

A ct

iv e

fir m

s l ist

ed b

ef or

e 20

17 C

EO p

ow er

m od

er at

th e

re la

tio ns

hi p

be tw

ee n

th e

di re

ct or

s’ e

du ca

tio n,

re ct

or s’

e xp

er tis

e, a

di re

ct or

s’ in

te rlo

ck in

g w

ith

C SR

d is

cl os

ur e

qu al

ity

O LS

C EO

p ow

er in

de x:

C EO

o w

n- er

sh ip

a nd

C EO

te nu

M en

la A

li et

a l.

(2 02

3) Ru

ss el

l 3 00

0 20

05 –2

02 0

ES G

d is

cl os

ur es

re du

ce c

or -

po ra

te ri

sk -ta

ki ng

, b ut

th is

w ea

ke ne

d by

th e

pr es

- en

ce o

f p ow

er fu

l C EO

FE , 2

SL S

IV C

EO d

ua lit

M ut

ta ki

n et

a l.

(2 01

8) B

an gl

ad es

h 20

05 –2

01 3

C EO

p ow

er n

eg at

iv el

y aff

ec ts

C SR

d is

cl os

ur es

d di

m in

is he

s t he

in flu

- en

ce o

f b oa

rd c

ap ita

l o n

C SR

d is

cl os

ur es

Pa ne

l l ea

st sq

ua re

re gr

es si

on C

EO p

ow er

in de

x: C

EO d

ua l-

ity , o

w ne

rs hi

p, te

nu re

, a nd

m ily

C EO

st at

N aa

m an

a nd

S un

(2 02

2) U

SA 19

94 –2

01 7

Th e

ne ga

tiv e

re la

tio ns

hi p

be tw

ee n

C EO

p ow

er a

R &

D in

ve stm

en t.

C EO

w er

im pa

ct is

st ro

ng er

r fi rm

s w ith

w ea

ke r

co rp

or at

e go

ve rn

an ce

O LS

, 2 SL

S C

PS , C

PS d

um m

y (g

re at

th an

th e

m ed

ia n)

, C EO

al ity

1119CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

O na

li et

a l.

(2 01

6) 15

E U

c ou

nt rie

s 20

05 –2

01 3

Po w

er fu

l C EO

s o f E

ur op

ea n

ba nk

s p ay

lo w

d iv

id en

an d

do n

ot h

av e

in du

ce -

m en

ts to

p ay

h ig

h di

vi de

nd s t

o di

sc ou

ra ge

in or

ity sh

ar eh

ol de

rs ’

m on

ito rin

2S LS

, 3 SL

S, H

ec km

an C

EO o

w ne

rs hi

p, C

EO te

nu re

, an

d un

fo rc

ed C

EO tu

rn ov

is in

str um

en te

d by

C EO

un de

Pu ch

et a-

M ar

tín ez

a nd

al le

go -Á

lv ar

ez (2

02 1)

16 c

ou nt

rie s

20 09

–2 01

8 Th

er e

is a

p os

iti ve

re la

tio n

be tw

ee n

C EO

p ow

er a

fir m

s’ C

SR d

is cl

os ur

an d

th is

is p

ro no

un ce

d w

he n

C EO

s’ c

om pe

ns at

io n

is li

nk ed

to sh

ar eh

ol de

r re

tu rn

G M

M C

EO p

ow er

in de

x ba

se d

3 du

m m

ie s:

C EO

d ua

lit y,

EO te

nu re

, C EO

b oa

m em

be rs

hi p

Sa nd

er s a

nd C

ar pe

nt er

99 8)

U SA

19 99

Lo ng

-te rm

C EO

p ay

, la

rg e

bo ar

ds , a

nd C

no n-

du al

ity h

el p

fir m

th e

in te

rn at

io na

liz at

io n

pr oc

es s

Lo gi

sti c,

P oi

ss on

, O LS

C EO

d ua

lit y,

C EO

st oc

k ow

ne rs

hi p,

C EO

te nu

Sa iy

ed e

t a l.

(2 02

3) In

di a

20 09

–2 01

1 En

tre pr

en eu

ria l i

nn ov

at io

n ha

s a n

on -m

on ot

on ic

re la

- tio

n w

ith fi

rm p

er fo

rm an

th at

is a

dv er

se ly

m od

er at

by C

EO p

ow er

C EO

p ow

er in

de x:

C EO

un de

r, C

EO in

si de

r, C

du al

ity /tr

ia lit

Sa rio

l a nd

A be

be (2

01 7)

U SA

20 06

–2 01

3 C

EO p

ow er

si gn

ifi ca

nt ly

pr ov

es fi

rm in

no va

tio n

N eg

at iv

e bi

no m

ia l r

eg re

s- si

on w

ith m

ax im

um li

ke li-

ho od

e sti

m at

io n

C EO

p ow

er in

de x:

C EO

al ity

, C EO

fo un

de r,

C EO

nu re

1120 S. Brahma, F. Economou

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Sc ho

po hl

e t a

l. (2

02 1)

U K

19 99

–2 01

7 Fe

m al

e ch

ie f fi

na nc

ia l

offi ce

rs c

ou ld

lo w

er fi

ris k-

ta ki

ng in

th e

pr es

en ce

g en

de r-d

iv er

se b

oa rd

s, di

ve rs

e na

tio na

lit ie

s, an

d ag

es a

nd w

he re

th e

C EO

le ss

p ow

er fu

FE , D

iD a

na ly

si s,

M ul

tip le

gh d

im en

si on

fi xe

d eff

ec t,

su bs

am pl

e an

al ys

C EO

d ua

lit y,

in si

de rs

w ho

in ce

nt iv

es m

at ch

w ith

th e

C EO

, C PS

Sh ah

ab e

t a l.

(2 02

2) U

SA 20

02 –2

01 7

C EO

p ow

er is

p os

iti ve

re la

te d

to C

SR d

ec ou

pl in

g O

LS , F

E, P

SM , 2

SL S,

M M

C PS

Sh ei

kh (2

01 8a

) U

SA 19

92 –2

00 6

C EO

p ow

er le

ad s t

o hi

gh er

fir

m in

no va

tio n

on ly

fo r

fir m

s w ith

h ig

he r p

ro du

m ar

ke t c

om pe

tit io

2S LS

(I V-

G M

M )

C EO

p ow

er in

de x:

C EO

tri

al ity

, f ou

nd er

, C PS

, b oa

in de

pe nd

en ce

, C EO

o w

ne r-

sh ip

, C EO

te nu

re Sh

ei kh

(2 01

9a )

U SA

20 03

–2 01

5 C

EO p

ow er

re du

ce s fi

C SR

a ct

iv iti

es . C

EO st

ru c-

tu ra

l a nd

o w

ne rs

hi p

po w

ne ga

tiv el

y aff

ec ts

C SR

, w

hi le

e xp

er t p

ow er

h as

n o

si gn

ifi ca

nt e

ffe ct

O LS

, I nd

us try

F E,

2 SL

S (I

V- G

M M

) C

EO p

ow er

in de

x: C

EO d

ua l-

ity /tr

ia lit

y, C

PS , C

EO p

ga p,

b oa

rd in

de pe

nd en

ce ,

C EO

fo un

de r,

C EO

o w

ne r-

sh ip

, C EO

te nu

Sh ei

kh (2

02 2)

U SA

19 92

–2 01

6 C

EO p

ow er

is p

os iti

ve ly

la te

d to

th e

lik el

ih oo

d of

p ay

in g

an d

in cr

ea si

di vi

de nd

s i n

th e

pr es

en ce

lo w

p ro

fit ab

ili ty

a nd

gh c

as h

flo w

v ol

at ili

Pr ob

it an

d lin

ea r p

ro ba

bi lit

y m

od el

(L PM

) r eg

re ss

io ns

, IV

C EO

p ow

er in

de x:

C PS

, te

nu re

, e qu

ity o

w ne

rs hi

an d

jo b

tit le

1121CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Sh ui

e t a

l. (2

02 2)

U SA

20 15

B ot

h po

w er

fu l a

nd w

ea k

C EO

s c an

in iti

at e

en vi

- ro

nm en

ta l i

nn ov

at io

ns if

ey a

re a

cc om

pa ni

ed b

y an

a pp

ro pr

ia te

b oa

rd o

f di

re ct

or s a

nd o

w ne

rs hi

p str

uc tu

N ec

es sa

ry c

on di

tio n

an al

ys is

C EO

d ua

lit y,

p er

ce nt

ag e

sh ar

es o

w ne

d by

C EO

s, C

EO o

ut si

de d

ire ct

or sh

ip ,

C EO

in fo

rm al

p ow

er fr

en vi

ro nm

en ta

l e xp

er tis

e m

ea su

re d

by C

EO s w

ha d

se rv

ed in

e nv

iro nm

en ta

l co

m m

itt ee

o r C

EO s w

er e

ap po

in te

d in

e nv

iro nm

en -

ta l m

an ag

em en

t p os

iti on

, C

EO in

fo rm

al p

ow er

fr om

& D

e xp

er tis

e m

ea su

re d

w he

th er

C EO

w as

a n

in ve

n- to

r o r w

he th

er th

e C

EO h

el d

an y

R &

D re

la te

d po

si tio

n Su

n et

a l.

(2 02

2) U

SA 19

93 –2

01 6

A p

os iti

ve re

la tio

ns hi

p be

tw ee

n C

EO p

ow er

a nd

nu al

re po

rt re

ad in

g di

ffi cu

lty , m

od er

at ed

b y

ea rn

in gs

p er

fo rm

an ce

o r

co rp

or at

e go

ve rn

an ce

. St

ro ng

er in

th e

ca se

o f

fir m

s t ha

t d is

pl ay

lo w

fin an

ci al

re po

rti ng

q ua

lit y

or sh

or te

r-t en

ur ed

C EO

O LS

, 2 SL

S C

PS , C

EO d

ua lit

y C

EO te

nu re

to d

iv id

e th

e sa

m pl

Su n

an d

Sk ou

se n

(2 02

2) U

SA 19

92 –2

01 9

Po w

er fu

l C EO

s a re

m or

e lik

el y

to c

au se

d is

co nt

in -

ue d

op er

at io

ns a

nd c

ou ld

so le

ad to

a la

rg er

sc al

e of

d is

co nt

in ue

d op

er at

io ns

Lo gi

sti c,

O LS

C PS

1122 S. Brahma, F. Economou

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Tu w

ey a

nd T

ar us

(2 01

6) K

en ya

N A

C EO

p ow

er re

str ai

ns th

e eff

ec t o

f b oa

rd le

ad er

sh ip

st ra

te gy

in vo

lv em

en t.

A n

in cr

ea se

in C

EO p

ow er

ad s t

o pa

ss iv

e bo

ar ds

th at

nd to

a cc

ep t t

he d

ec i-

si on

s o f t

he C

M od

er at

ed re

gr es

si on

al ys

is C

EO d

ua lit

y, C

EO te

nu re

, C

EO o

w ne

rs hi

U rb

an (2

01 9)

m ul

tip le

c ou

nt rie

s 19

98 –2

01 0

C EO

s a re

m or

e po

w er

fu l

in h

ie ra

rc hi

ca l c

ou nt

rie s,

w hi

ch w

ea ke

ns fi

rm s’

g ov

- er

na nc

e, a

nd th

es e

C EO

s ar

e un

lik el

y to

b e

re m

ov ed

Fi rm

F E,

O LS

, a nd

C O

pr op

or tio

na l h

az ar

d m

od el

C EO

d ua

lit y,

C EO

te nu

re ,

C EO

o w

ne rs

hi p,

C EO

si de

1123CEO power and corporate strategies: a review of the literature

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

W al

ls a

nd B

er ro

ne (2

01 7)

U SA

20 01

–2 00

7 C

EO p

ow er

a ct

s a s a

c at

al ys

t to

p ro

m ot

e en

vi ro

nm en

ta l

ac tiv

ity w

he n

sh ar

eh ol

de r

ac tiv

is m

e xi

sts

FE In

de x

of C

EO fo

rm al

a nd

fo rm

al p

ow er

: C EO

in fo

r- m

al e

nv iro

nm en

ta l e

xp er

t po

w er

(i ) c

on te

nt -b

as ed

EO s i

nv ol

ve m

en t i

n en

vi -

ro nm

en t a

ct iv

iti es

, h on

or s

or aw

ar ds

re ce

iv ed

b y

C EO

s fo

r e nv

iro nm

en ta

l w or

k) (i

i) pr

oc es

s- ba

se d

(p rio

r o ffi

ci al

le s i

n en

vi ro

nm en

ta l

po sts

, p rio

r m em

be rs

hi p

in e

nv iro

nm en

ta l m

at te

rs ),

C EO

fo rm

al p

ow er

o ve

r TM

T: (C

EO te

nu re

, t en

ur e

in c

om pa

ny , n

o. o

f d ire

ct or

s ap

po in

te d

by C

EO ),

C EO

rm al

p ow

er o

ve r t

bo ar

d: C

EO d

ua lit

y, C

fo un

de r o

r r el

at iv

e Za

go no

v an

d Sa

lg an

ik -

Sh os

ha n

(2 01

8) U

SA 19

93 –2

00 4

C PS

d oe

s n ot

c on

si de

r t he

ta l i

nf or

m at

io n

in cl

ud ed

th e

co m

pe ns

at io

n da

of to

p ex

ec ut

iv es

A lte

rn at

e m

ea su

re s o

f C EO

y C

Za ja

c an

d W

es tp

ha l (

19 96

b) U

SA 19

86 –1

99 1

W he

n ou

tg oi

ng C

EO p

ow er

m or

e th

an b

oa rd

p ow

er ,

su cc

es so

r C EO

s h av

e th

e sa

m e

de m

og ra

ph ic

c ha

ra c-

te ris

tic s a

nd v

ic e

ve rs

H ec

km an

se le

ct io

n m

od el

C EO

d ua

lit y,

C EO

te nu

re ,

no . o

f o ut

si de

d ire

ct or

s ap

po in

te d

af te

r C EO

to ok

offi

ce , o

ut si

de st

oc k

ow ne

r- sh

1124 S. Brahma, F. Economou

1 3

Ta bl

e 6

(c on

tin ue

A ut

ho r/s

am pl

e pe

rio d

C ou

nt ry

Sa m

pl e/

fir m

-y ea

r o bs

er va

- tio

n M

ai n

fin di

ng s

M et

ho do

lo gy

M ea

su re

s o f C

EO P

ow er

Za ja

c an

d W

es tp

ha l (

19 96

b) U

SA 19

85 –1

99 2

D ire

ct or

s w ith

ar e

co nt

ro l i

n th

ei r c

ur re

nt b

oa rd

s a re

tra ct

ed to

o th

er c

om pa

- ni

es ’ b

oa rd

s w he

re th

ca n

en jo

y si

m ila

r c on

tro l

Po is

so n

C EO

d ua

lit y,

m ul

tip le

re ct

or sh

ip s,

bo ar

d in

de pe

nd en

ce : p

ar tic

ip a-

tio n

in d

ec re

as ed

o ut

si de

r ra

tio ; p

ar tic

ip at

io n

in C

EO /

bo ar

d ch

ai r c

om bi

na tio

pa rti

ci pa

tio n

in in

cr ea

se d

di ve

rs ifi

ca tio

n; p

ar tic

ip at

io n

in re

du ce

d co

m pe

ns at

io n

co nt

in ge

nc y;

a nd

p ar

tic ip

a- tio

n in

in cr

ea se

d co

m pe

ns a-

tio n

Zh an

g et

a l.

(2 01

1) C

hi na

20 01

–2 00

3 C

EO s t

en d

to d

is m

is s s

en io

r no

n- C

EO e

xe cu

tiv es

w ho

ve le

ng th

ie r t

en ur

e th

th em

. T hi

s r el

at io

ns hi

p is

in fo

rc ed

b y

C EO

fo un

de r

st at

us a

nd p

oo r fi

rm p

er -

fo rm

an ce

a nd

d im

in is

he d

by C

EO o

w ne

rs hi

B in

om ia

l h ie

ra rc

hi ca

l l in

ea r

m od

el s (

H LM

) C

EO fo

un de

r, C

EO o

w ne

rs hi

Zh an

g et

a l.

(2 02

2) C

hi na

20 08

–2 01

8 Th

is st

ud y

fin ds

th at

C EO

w er

h as

a p

os iti

ve a

ss o-

ci at

io n

w ith

e nv

iro nm

en ta

l in

no va

tio n,

a nd

th is

m or

e pr

on ou

nc ed

in th

e pr

es en

ce o

f i nd

ep en

d- en

t d ire

ct or

s a nd

m ar

ke t

co m

pe tit

io n

G en

er al

iz ed

e sti

m at

io n

m od

el C

EO p

ow er

in de

x: C

EO d

ua l-

ity , C

EO in

si de

r d ire

ct or

, C

EO o

w ne

rs hi

p, sh

ar eh

ol d-

in g

of in

sti tu

tio na

l i nv

es to

rs ,

C EO

p ro

fe ss

io na

l t itl

e, C

te nu

re , C

EO e

du ca

tio n,

EO p

ar t-t

im e

jo b

Th is

T ab

le sh

ow s a

ll th

e stu

di es

re la

te d

to C

EO p

ow er

a nd

o th

er c

or po

ra te

st ra

te gi

1125CEO power and corporate strategies: a review of the literature

1 3

Other studies of CEO power on bank performance observe a significant positive impact on bank profitability, asset quality, and insolvency risk in the context of the credit and sov- ereign debt crises (Mollah and Liljeblom 2016). In a similar vein, using a sample of dif- ferent Chinese banks in terms of ownership structure, Fang et al. (2020) report that CEO power improves bank performance in terms of profitability, lending quality, and risk-taking ability. This study also shows that board strength measured by the percentage of foreign directors and board independence could curb the favorable impact of CEO power on these bank performance indicators. Within the same context of firm ownership, Le et al. (2022) demonstrate that firms with high foreign ownership have witnessed a positive and signifi- cant effect of CEO power on earnings management.

As mentioned in Sect. 2, Bebchuk et al. (2011) use CPS to measure CEO power and report that CPS can explain a range of corporate performance indicators. Specifically, CPS is linked to lower Tobin’s Q, reduced accounting profitability, lower stock return after the acquisition announcement, inferior performance to CEO turnover, and a drop-in stock returns following proxy statement filings in periods of high CPS. As shown in Sect. 2, sub- sequently, several studies have adopted CPS as the proxy of CEO power.

In an earlier study, Adams et al. (2005) show that CEO power leads to more variability in firm performances measured by stock price variability in terms of best and worst per- formances, and this is prominent in firms where the CEO is also the founder. This study also suggests that dilution of CEO power, as advocated by governance literature, would be costly and reduce the chances of remarkable performances. In a comparable study, Ting (2013) also notice that volatility is lower for firms with less successor power and higher announcement period abnormal returns are generated when the power level is the same between these successors and predecessors. In a related study, Tang et al. (2011) find that dominant CEOs bring varied strategies that lead to extreme performances. They also show that dominant CEOs with powerful boards could positively affect firm performance, while with less powerful boards, it could lead to negative effects. Using data from US publicly traded firms, Tang and Crossan (2017) observe that distressed firms have a higher like- lihood of hiring dominant CEOs, and these dominant CEOs have a lower likelihood of initiating strategic changes during distressed conditions but bringing additional strategic changes in normal state. Taking a similar dataset, Tang (2021) suggests a novel proxy of CEO self-discipline in power use5 and shows that this measure leads to the favorable con- sequence of CEO power on firm performance. Saleh et al. (2022) find that the positive relation between institutional ownership and firm value is more pronounced in the presence of powerful CEOs. Buyl et al. (2011) find that CEOs with higher shared experience would assist TMT functional diversity in improving performance compared to CEO power stem- ming from their founder status. In a similar vein, Park et al. (2018) examine a sample of big Korean firms and report that CEO power worsened the adverse impact of CEO hubris on firms’ outcome, whereas vigilant board moderated this effect. Chiu et al. (2022) examine the impact of CEO power on the relationship between operational efficiency and organiza- tion capital. The authors report that when the firm’s CEO is also the founder, a higher level of investment in organization capital will increase firm value. On the contrary, when the firm’s CEO is the only insider on the board, a higher level of investment in organization capital to protect their position could reduce firm value. In firms with even more power- ful CEOs (who combine CEO founder, CEO-only insider, and CEO duality), the negative

5 This is measured by CEO’s relative pay and CEO’s photograph presence in the annual report.

1126 S. Brahma, F. Economou

1 3

effect of a higher level of investment in organization capital on future firm value is even larger. Taken together, these studies suggest that CEO power measured by different meas- ures may not always lead to agency costs and could actually improve firm performance under certain conditions.

Some studies have examined whether the influence of CEO power on firm performance could be mediated by corporate governance mechanisms. For instance, using a sample from Fortune 500 firms, Daily and Johnson (1997) observe that CEO power and firm perfor- mance are intertwined and find that the number of independent directors does not increase firm performance. Harjoto and Jo (2009) report that CEO power has an unfavorable influ- ence on firm value and operating performance in the early stage of firms’ life cycle and positive effect in the mature stage of firms’ life cycle, thereby lending support to life cycle theory. This study also indicates that external monitoring by institutional investors could curb the negative effect of CEO power in comparison to internal monitoring through board independence and blockholder ownership. Cormier et al. (2016) document that strong CEO power could lead to financial misreporting, and corporate governance mechanisms in terms of board independence proved ineffective in curbing this. However, Duru et al. (2016) observe that CEO duality adversely affects firm performance because of entrenchment, but independent directors could moderate this. In a related study, Haynes et al. (2019) show that CEO power has an adverse consequence on firm performance regarding the function- ing of internal and external corporate governance processes. This study also shows that this negative influence is moderated by board monitoring and Sarbanes Oxley (SOX) statute. Colak and Liljeblom (2022) examine the impact of CEOs’ tenure on firm performance after the replacement of the CEO. Their results indicate that preceding CEOs’ tenure negatively impacts operating performance and stock returns and is associated with higher restructur- ing costs, larger asset write-offs, and slower firm recovery. Moreover, weaker corporate governance, along with a long tenure of preceding CEOs with lower skills, intensifies the reported effects.

Few studies have shown the influence of board gender diversity on CEO power and find contrasting results. Harper et al. (2020) report that CEO power is alleviated after a firm undergoes a stock price crash, and female CEO power is curbed after the crash compared to male CEOs. Saiyed et al. (2023) attempt to examine the effect of CEO power on entre- preneurial orientation (EO) and find a U-shaped association between EO and firm per- formance. However, this is negatively moderated by CEO power. This suggests that CEO power has a favorable impact only at lower levels of EO. Shahab et al. (2020) note a reverse causal effect as they report that CEO power aggravates stock price crashes. However, this effect is alleviated in a gender-diverse board characterized by a critical mass of three or more directors and with high ownership by blockholders and institutions.

Conversely, Usman et al. (2018) and Brodmann et al. (2022) observe that CEO power increases with board gender diversity as female directors are weak monitors and suggest legislative gender quotas on boards could be implemented on ethical and social grounds but not from the perspective of economic advantage. Brodmann et al. (2022) further observe that the positive effect of CEO power on gender diversity is higher in younger and larger boards and the presence of a higher level of institutional ownership. Brodmann et al. (2021) show that CEO power has an adverse effect on corporate sexual orientation and equality policies measured by corporate equality index score.

Several studies have examined CEO power on firm performance in the context of differ- ent environmental factors. For instance, Abebe et al. (2011) show that CEO power leads to increased corporate turnaround for firms in a stable environment but negative turnaround for firms in a dynamic environment. Sheikh (2018b) examines whether CEO power has a

1127CEO power and corporate strategies: a review of the literature

1 3

different consequence on firm performance depending on whether firms are driven by high and low product market competition. This study reveals that CEO power has a favorable impact on firm performance only in markets with high competition. Conversely, Han et al. (2016) report the unfavorable impact of CEO power on firm performance during exoge- nous shocks characterized by industry downturns and recommend a dispersed decision- making structure during such exogenous shocks. In a similar vein, Gunasekarage et al. (2020) report that CEO power has a varying influence on firm performances for different firms categorized by the Boston Consulting Group (BCG) matrix. Specifically, this study reports that CEO power has a favorable and substantial influence on firm performance for firms characterized by high growth and high market share and for firms with high growth and low market share and has an adverse effect in the low growth/ high market share cat- egory. The results are insignificant for the low growth/low market share category.

Other studies of CEO power and firm performance look into corporate divestiture (Brahmana et al. 2021), outside versus inside CEOs (Zhang and Rajagopalan 2010) and endogeneity issues (Li 2016). Brahmana et al. (2021) report that CEO power could curb the adverse effect of corporate divestiture on firm performance and lends support to the entrenchment hypothesis of agency theory and suggests that incentives and bargaining power of CEOs are plausible reasons behind this result. Zhang and Rajagopalan (2010) observe that the effect of CEO power on firm strategic change is positive when this change is from low to moderate and negative when this change is from moderate to high, and this is more prominent for firms with outside CEOs.

7 CEO power and executive compensation

Table 4 reviews all the studies on CEO power and executive compensation. Westphal and Zajac (1995) find that when CEOs and boards have similar demog-

raphy, it increases CEO compensation. Choe et al. (2014) observe that CEO power leads to a rise in CEO salary, and in the absence of salary constraint, CEO stock-based compensation is not related to CEO power. CEO power leads to a rise in stock-based compensation in cases with a salary cap. These results hold only when CEO power is gauged by CPS, thereby supporting managerial power theory. In a related study, Tian and Yang (2014) report that CEO power is linked to CEO incentives over a reason- able portion. They also find that although bank CEO compensation fell during the 2008 financial crisis, it was better than firm performance. Similarly, using the CEO power index, Hill et al. (2016) find that powerful CEOs could cause excessive CEO compen- sation. In related research, Elhagrasey et al. (1999) aim to examine whether CEOs use political power to sway boards’ compensation choices and show that there is indeed a favorable influence of CEO power proxied by CEO tenure, CEO duality, and CEO compensation. Specifically, this study finds that CEO tenure strongly influences CEO compensation for large and high-performing firms. At the same time, CEO duality has a more substantial impact on smaller and low-performing firms. They also report multiple determinants of CEO compensation, thereby suggesting legitimacy in the compensation obtained by CEOs. Joura et al. (2022) find that shareholder voice could help to reduce the pay gap between CEOs and other executives, but CPS tends to increase the pay gap whereas duality has no direct impact on the pay gap, but it indirectly affects the pay gap through enhancing the effectiveness of shareholders’ say on pay. This study also finds that older or female CEOs tend to reduce the pay gap. Bugeja et al. (2017) find that the

1128 S. Brahma, F. Economou

1 3

CPS of successor CEOs is like that of outgoing CEOs, and most firms are efficient in reducing excess CPS, thus refuting managerial power theory and supporting optimal contract theory.

Luo (2015) shows that CEO power did not cause an increase in executive compensa- tion in Chinese banks. In addition, this study reveals that ownership structure substan- tially affects executive compensation and attributes this to the distinct corporate govern- ance mechanism of Chinese banks. Zhu et al. (2021) show that CEO power causes a reduction in the CEO-Chair pay gap; however, this relation is moderated by the Chair- CEO age gap. They also find that the dampened impact of Chair-CEO age disparity is weakened with the rise in working time between the CEO and Chair. In addition, their result also supports the view that powerful CEOs would negate the Chair-CEO age dis- parity on Chair-CEO pay gap. This study provides crucial corporate governance impli- cations on the board supervisory role through the cognitive conflict of Chair-CEO age disparity.

Boyer (2005) attempt to analyze the puzzling paradox of high CEO compensation at a time when shareholders’ value creation should be the norm. This study provides an alternative rationalization of this paradox by showing that financial markets that are supposed to discipline managers are instead conspiring with opportunistic CEOs to pro- vide higher compensation through stock options. Another research on public outrage regarding executive compensation reports that powerful CEOs use performance-vested stock options (PVSO) early when there is public outrage over executive compensation, albeit this could be detrimental to shareholder value creation (Abernethy et al. 2015). Pollock et al. (2002) study the consequence of CEO power on the repricing of executive stock options and find that CEO duality boosts the chances of repricing when the spread between strike price and stock price is higher. In comparison, the other pointers of CEO power used in the study, which are the number of board members hired by the CEO, staggered board, percentage of voting shares by CEO, and institutional investors, reduce the likelihood of repricing. Ryan and Wiggins (2004) show that directors’ equity-based compensation is reduced by CEO power, whereas board independence tends to increase this.

Kalyta and Magnan (2008) find that supplemental executive retirement plans (SERP) benefits are widespread and considerable across CEOs, and CEO power significantly aug- ments the SERP benefits. They also report that CEO SERP benefits increase significantly in the last year before CEOs’ retirement. Kalyta (2009) extends this research by taking eight proxies of CEO power and reports that greater CEO power is associated with higher CEO compensation via SERPs, thereby supporting managerial theory. Moreover, CEOs reduce R&D expenditures for the years before retirement when SERP benefits depend on firm performance.

Henderson et al. (2010) show that when firms undergo layoffs, powerful CEOs face lower cuts in bonuses and more equity-based compensation than less powerful CEOs. They also document that CEO power does not lead to a substantial difference in post-layoff performance. Ntim et al. (2019) examine whether CEO power and corporate governance mechanism moderate PPS and find that PPS increases in firms with robust governance, thus supporting the optimal contract theory. Mainly their evidence shows that firms with repu- table founder CEOs and CEOs with high ownership with independently appointed nomina- tion and remuneration committees have higher PPS than firms with powerful CEOs, long tenure, and larger board size. They also find support for the managerial power hypothesis as their results show a direct causal link between executive pay and performance, albeit comparatively small PPS.

1129CEO power and corporate strategies: a review of the literature

1 3

8 CEO power and firm risk‑taking

Few studies have examined the consequence of CEO power on firm risk-taking. Table 5 reviews all the studies that examine CEO power and firm risk-taking.

Chintrakarn et al. (2015) show that the relationship between firm risk-taking is non- monotonic. This study finds that at low levels of CEO power, firm risk-taking is minimal, and firm risk-taking increases only when CEO power is above the 75th percentile of CPS. Lewellyn and Muller-Kahle (2012) show that CEO power positively impacts firm excessive risk-taking. They attribute this to a corporate governance mechanism guided by agency theory that drives managers to take excessive risks. Sheikh (2019b) also shows that CEO power positively influences firm total and idiosyncratic risk when the firms have robust corporate governance mechanisms and strong external discipline through increased product market competition. In a similar vein, it has been reported that bank risk-taking increases with powerful CEO, and this effect is strengthened by institutional investors and poor bal- ance sheets (Altunbas et al. 2020). This study suggests that when it comes to bank risk- taking, the goals of the powerful CEOs are aligned with those of the institutional investors. This study does not find corporate governance characteristics like board size and board independence to moderate this effect. Shabir et al. (2023) report that powerful CEO with a strong board alleviates the negative impact of economic and geopolitical uncertainty on bank risk. However, this result is true for large banks with higher liquidity and profitability. Pour et al. (2023) show that CEO power positively affects bank risk-taking in the pres- ence of individualism and uncertainty avoidance. Zhao et al. (2023) show that firms’ ESG performance alleviates firm risk, and this relationship is stronger with CEO power and lower institutional investor holdings. In a related study, Menla Ali et al. (2023) show that ESG disclosure negatively impacts firm risk, which is more pronounced for market-based risk rather than accounting-based risk in the presence of powerful CEOs. This study also reports that firms’ reputation, information transparency, and internal control are channels by which ESG performance affects firm risk. Korkeamäki et al. (2017) examine whether CEO personal leverage leads to heightened firm leverage, and they find the result to be affirmative for higher CEO power characterized by long-tenured CEOs and CEO-Chair duality. However, they find that this result does not hold for those CEOs whose significant percentage of wealth is linked to the firm and also in the presence of blockholders.

Zou et al. (2021) distinguish between formal and informal CEO power when testing their relationship with firm risk. They find that CEO ownership and CEO founder status (formal power) positively relate to firm risk. In contrast, CEO’s expertise captured by CEO tenure (informal power) has a negative relationship with firm risk. CEO duality, CEO social ties, and CEO educational level do not display statistically significant results. More- over, corporate social responsibility has a mediating role in the relationship between CEO power and firm risk.

In contrast, Pathan (2009) reports that CEO power adversely impacts bank risk-taking. This study also shows that bank risk-taking is positive, with strong boards characterized by reduced board size and fewer restrictions. Tan and Liu (2016) construct a CEO power index and show an inverse relation between managerial power and idiosyncratic volatil- ity. This study further suggests that powerful managers undertake their vested interests under market limitations at the cost of shareholder wealth creation since shareholders can- not gauge managerial endeavors. Drawing from the organizational and behavioral theory perspective that individual choices are radical, Haider and Fang (2018) also report that CEO power adversely influences firm risk-taking, proxied by total risk and idiosyncratic

1130 S. Brahma, F. Economou

1 3

risk. This result is moderated by the presence of large shareholders, thereby supporting the agency theory that large shareholders can supervise and sway management. However, CEO power and firm risk-taking differ across state-owned and non-state-owned enterprises.

Using data from US firms, Liu and Jiraporn (2010) document that bondholders find CEO power to be crucial in determining bond financing. Particularly they perceive that powerful CEOs create an opaque information situation, demanding higher bond yields. In a related study, Huang and Gao (2022) find that CEOs formal power led to a rise in firms’ debt policy persistence while CEOs’ informal power has the opposite effect, and this is more pronounced for CEOs’ formal ownership power and CEOs’ informal financial expert power.

9 CEO power and other corporate strategies

This section reviews all the other literature on CEO power and corporate strategies. The review of all these studies is shown in Table 6.

9.1 CEO power and governance structure

Sanders and Carpenter (1998) report that long-tenure CEO pay, CEO non-duality and large boards help firms to deal with information-processing demands and agency problems stemming from the internationalization process. Bigley and Wiersema (2002) attempt to integrate corporate governance research with upper echelon theory and shows that power- ful CEOs maintain the status quo instead of refocusing firms’ business portfolio as heir apparent experience increases. However, when CEO power is measured by CEOs’ prestige power, that is, the number of outside directorships held by the CEO, this result is negated. Deriving from resource dependence theory, Haynes and Hillman (2010) explore how the breadth and depth of board capital impact firms’ strategic change and whether CEO power curbed this. The results partially support that CEO power moderates the consequence of board capital breadth and has no impact on board capital depth. Specifically, CEO power curbs the influence of board heterogeneity on strategic divergence.

In another study of CEO power and governance structure, by constructing a CEO power index using ten distinctive characteristics, Lisic et al. (2016) show that the effectiveness of audit committee decreases with CEO power, and this is more pronounced when CEOs extract more rent from the firm through insider trading. In a similar vein, Kim et al. (2017) looks into the post-Sarbanes–Oxley period and find that having an accounting expert on the audit committee could improve the auditing process as it leads to a comprehensive audit process. However, CEO power acts as an impediment to this process. Extending this line of research, Al-Dhamari et al. (2022) advance that powerful CEOs weaken the favora- ble impact of the overlap between audit and remuneration committees on the cost of debt.

Combs et al. (2007) adopt event study methodology to measure the interaction of board composition and CEO power in the event of CEO deaths. They report that in the event of deaths of high (low) powered CEOs, the market reacted favorably (unfavorably) when the boards were governed by inside directors and unfavorably (favorably) when outside directors governed the boards. Overall, their results suggest that although regulation favors board independence, it may not be favorable to shareholders. Hence, the level of CEO power should be considered while determining board independence. In a related study, Dowell et al. (2011) advance that one size fits all governance structure is unsuccessful in

1131CEO power and corporate strategies: a review of the literature

1 3

the context of examining the collapse of publicly traded internet firms. Specifically, this study conducts event history analysis and shows that CEO power and smaller boards create a unity of command which is advantageous for fast decision-making for firms facing finan- cial distress. Deriving from theories of institutional logic and structural elaboration, Joseph et al. (2014) assert that CEO-only structure is prevalent among firms with more insiders in the board. This study further contends that although a CEO-only structure is in line with the shareholder value logic, it is favored by powerful CEO to remove insiders who are voices of dissent.

Another study on CEO power and board leadership suggests that CEO power diminishes the positive influence of board leadership on firm strategy (Tuwey and Tarus 2016). Gra- ham et al. (2020) investigate CEO power and board dynamics and report that when perfor- mance is weak, powerful CEOs are unlikely to be removed, and in the event of the death of powerful CEOs, market reaction is positive. This study also finds that board independence increases with the hiring of a new CEO, as new CEOs are likely to have a lower power to bargain, and board independence decreases with an increase in CEO tenure. Lewellyn and Fainshmidt (2017) suggest that CEO duality or non-duality is strengthened or counterbal- anced by other types of power embedded in the CEO. They show that CEO duality bundled with information power provides effective corporate governance when it is moderated by high organizational and industry discretion. Conversely, CEO non-duality is effective when high organizational and industry discretion is absent. Graham et al. (2020) show that CEO power measured by tenure is inversely linked to board independence, and this gets weaker during uncertainty. They also find that higher CEO tenure increases the likelihood of CEO duality and reduces the chance of the CEO getting replaced in the event of poor firm per- formance. In addition, they show that stock market reaction is positive when powerful CEOs die, consistent with the results of Combs et al. (2007) discussed above.

Krause et al. (2016) investigate cultural power distance and CEO power and advance that shareholders determine firms’ legitimacy, and customers also have a crucial role. In this context, they argue that customers of firms competing in a high-power-distance culture view increased CEO power as legitimate, and this is more prevalent for firms that rely on their customers. Another study on CEO and culture investigates hand-collected data from 37 countries and observes that CEO retention is higher in hierarchical countries (Urban 2019). These CEOs have idiosyncratic management styles, and their greater power reduces firm governance.

Bristy et al. (2022) examine the impact of CEO power on labor-friendly policy. Accord- ing to their findings, CEO power, captured by a CEO power index, is negatively related to labor-friendly policy without affecting firm value. However, powerful CEOs invest more in labor-friendly programs in the cases of a competitive market, innovation-intensive firms, and union-intensive industries, resulting in higher firm value.

9.2 CEO power and CEO succession

Some of the earlier studies by Westphal and Zajac (1995) and Zajac and Westphal (1996a, b) report that when CEOs are more (less) powerful than the board, new direc- tors are hired with similar demographic similarities as the CEOs (board). This supports the social psychological perception that CEOs and boards use their power to hire direc- tors with similar philosophies to avoid the chances of dissent. However, this result is at odds from a political standpoint as studies on corporate governance attribute political motives only to CEOs and not to board members. Another study finds that in firms with

1132 S. Brahma, F. Economou

1 3

inferior performance, outside directors facilitate the exit of an heir apparent to restrict the sway of incumbent CEOs. In contrast, outside directors protect the heir apparent for firms with high performance and prevent the incumbent CEOs from abusing power (Cannella and Shen 2001). Horner and Valenti (2012) show that incoming and outgoing CEOs are the strongest players in the CEO nomination process. Firms looking to have CEO-Chair duality would hire CEOs with prior Chair experience, and outgoing CEOs with long tenure reduce the chance of CEO-Chair duality for incoming CEOs, suggest- ing that powerful CEOs can manipulate the succession process. Zajac and Westphal (1996b) show that powerful directors who enjoyed significant control over the board would like to move to companies where they can exert similar control. In addition, this study finds that directors who have faced governance changes prefer to move to firms with powerful CEOs and weaker boards.

Using a model of project appraisal, Baldenius et al. (2014) find that shareholders tend to nominate more advisors to the board to curb CEO entrenchment. In contrast, powerful CEOs could dictate the nomination process and create a monitor-heavy board to prevent information cascading to shareholders. This study reports that board moni- toring negatively affects firm performance. However, the relationship is driven by firm attributes like agency issues. Zhang et al. (2011) report that non-CEO executives are expected to be dismissed and exit from TMT if they have higher age and tenure than CEOs, and this is exacerbated by firms with founder CEOs and poor performance and alleviated by CEO ownership.

9.3 CEO power, investments, and acquisitions

Fralich and Papadopoulos (2008) report that CEO power leads to lower bid premiums in a merger sample of S&P 500 firms during the financial crisis. They attribute this to powerful CEOs adopting more risk-averse behavior driven by heightened information asymmetry. Balmaceda (2009) suggests a model of merger where gains of mergers were distributed between buyers and sellers as a generalized Nash bargaining solution. In addition, power- ful CEOs use their network to get information about target firms, enabling them to evalu- ate the attributes of the target firms better. In a related study, taking all four categories of CEO power coined by Finkelstein (1992), Chikh and Filbien (2011) show that powerful CEOs had a propensity for takeover deal completion even when the market signaled nega- tive announcement period returns. Similarly, Dutta et al. (2011) also document that power- ful CEOs engage in more acquisitions and show that CEO power may not lead to value- destroying acquisitions as M&A announcement period returns are unrelated to CEO power. Greve and Matsuhashi (2007) have used two proxies of CEO power: CEO social capital, which has been proxied by CEO tenure, and formal power concentration, which is the pro- portion of executives hired by the CEO during their tenure. They show that CEO tenure has a favorable effect on diversification, whereas the proportion of executives appointed is inef- fective to reverse diversification. Falenbrach (2009) reports that investment in firms with founder CEOs generates higher returns and higher firm valuations than firms with suc- cessor CEOs, which is robust across various firm characteristics. This study also observes that founder CEOs invest in more research and development, capital-intensive projects, and more focused mergers and acquisitions. Lo and Shiah-Hou (2022) find that increased CEO power reduces overinvestment and attribute this to CEOs’ risk averseness. They also link this result to powerful CEOs’ ability to make prudent investment decisions.

1133CEO power and corporate strategies: a review of the literature

1 3

9.4 CEO power, firm innovation, and product market competition

Using data from S&P 500 firms, Sariol and Abebe (2017) show that explorative firm innovation rises with CEO power, which is prominent for firms with outsider CEOs. In a related study, Sheikh (2018a) observes that CEO power leads to increased firm inno- vation, as shown by patents and citations, only for firms characterized by high product market competition. This study concludes that product market competition alleviates agency problems and encourages CEOs to make decisions that would create shareholder wealth. Jaroenjitrkam et al. (2020) investigate S&P 1500 firms and report that CEO power is reduced by higher product market competition, and this is exacerbated in firms with entrenched management, with a reduction in CEO ownership and analyst coverage and those earning windfall performance. Lo and Shia-Hou (2022) find that powerful CEOs with greater discretion tend to overinvest, and it is the reverse for powerful CEOs with higher risk aversion and higher managerial skills.

9.5 CEO power and payout policy

Onali et al. (2016) report that powerful CEOs of European banks pay low dividends to maintain the capital position of the banks and do not have incentives to pay high dividends to discourage monitoring by minority shareholders. In a related study, Chin- trakarn et al. (2018) show that CEO power negatively impacts dividend payout. They interpret this result in terms of agency theory to suggest that higher dividends reduce free cash flows for CEOs, and hence powerful CEOs are reluctant to pay higher divi- dends. Sheikh (2022) documents that CEO power (captured by an index including CEO pay slice, tenure, equity ownership, and job titles) is positively related to the likelihood of paying and increasing dividends in low profitability and high cash flow volatility. Moreover, powerful CEOs are more likely to pay dividends to gain a reputation in capi- tal markets and raise funds externally at favorable terms.

9.6 CEO power and earnings management

Baker et al. (2019) examine CEO power relative to Chief Financial Officer (CFO) power in the context of accruals earnings management (AEM) and relative earnings manage- ment (REM) both in the pre-Sarbanes–Oxley Act (SOX) and post-SOX eras. In the pre- SOX period, this study discerned that when the CEO is powerful compared to CFO, AEM is greater than REM and vice versa. However, in the post-SOX period, they find that the consequence of CEO power on AEM is reduced, whereas the effect of CFO power on REM remained unchanged. They also find that CFOs’ power could obstruct the AEM choice in both the pre-SOX and post-SOX period, whereas the REM choice of a powerful CFO is curbed by powerful CEOs only in the pre-SOX era. In another study of corporate earnings, DeBoskey et al. (2019) argue that powerful CEOs also use pow- erful rhetoric and positive tone in their earnings management, and this is moderated by board oversight for CEOs with longer tenure.

Sun et al. (2022) report a positive relationship between CEO power and annual report reading difficulty (i.e., difficulty in reading and understanding the annual report). This relationship is moderated by earnings performance or corporate governance and gets

1134 S. Brahma, F. Economou

1 3

stronger in the case of firms that display lower financial reporting quality or shorter- tenured CEOs.

9.7 CEO power, CSR, and R&D investment

Studies on powerful CEOs and corporate social responsibility (CSR) observe that CEO power is inversely linked to firms’ decision to be involved in CSR, thereby corroborating the legitimacy of the stakeholder theory of CSR and showing that CSR activities increase firm values (Harper and Sun 2019; Li et al. 2016). Harper and Sun (2019) also find that female CEOs are more involved in CSR activities than their male counterparts. In a similar vein, Muttakin et al. (2018) report that CEO power negatively affects CSR disclosures and lowers the impact of board capital on CSR practices. Sheikh (2019a) also reports this result and further contends that structural and ownership dimensions of CEO power adversely affect CSR, while expert power bears no influence on CSR. Using a large international sample, Breuer et al. (2022) investigate the interaction of organizational and external fac- tors and report that powerful CEOs tend to engage in CSR activities that lead to a fall in firm value when given more discretion. They assert that the main motivation for CEOs to engage in CSR is to enhance their reputation. On the contrary, Pucheta-Martínez and Gal- lego-Álvarez (2021) report that CEO power is positively related to CSR disclosure, and this relationship is reinforced when CEO compensation is linked to shareholder return. Mas- wadi and Amran (2023) find that CEO power moderates the relationship between board capital attributes and CSR disclosure (CSRD) quality. This study also finds that directors’ political ties are negatively associated with CSRD quality. Walls and Berrone (2017) assert that in the presence of shareholder activism, CEO power plays a vital role in environmental performance, while only CEO expert power contributes towards environmental activism when there is no shareholder activism. This study has introduced several novel measures of CEO power related to environmental issues, as discussed in Sect. 2. Al-Shaer et al. (2023) report that CEO managerial power measured by CEO duality and number of executives on the board has a positive effect on environmental performance, and this is greater in firms with more independent boards and diverse boards, in firms that are not loss-making and those which operates in environmentally sensitive sectors. However, CEO legitimate power measured by CEO tenure does not affect firms’ environmental performance. In related research, Zhang et al. (2022) find that CEO power positively impacts environmental innovation, which is greater in the presence of independent boards and higher market com- petition. Shui et al. (2022) report that both powerful and weak CEOs can engage in envi- ronmental initiatives when a suitable board and ownership structure complements them. This study also contends that CEOs with formal power should be monitored, and boards with strong industry connections could balance less powerful CEOs. Shahab et al. (2022) document that CEO power positively influences CSR decoupling. Jia et al. (2022) report that firm visibility, which is the scrutiny firms face from investors, explains the relationship between CEO power and CSR. Specifically, this study finds that firm visibility moderates the negative relation between CEO structural power and CSR and increases the positive relation between CEO expert power and CSR.

Chen (2014) finds that CEO power substantiates the favorable impact of board capi- tal on R&D investment. Naaman and Sun (2022) observe a negative relationship between CEO power (using alternative proxies) and R&D investment, indicating that firms with more powerful CEOs are less likely to make R&D investments, and CEO power impact being stronger for firms with weaker corporate governance.

1135CEO power and corporate strategies: a review of the literature

1 3

9.8 CEO power and firm leverage

Jiraporn et al. (2012) find that powerful CEOs adopt a low level of leverage to evade dis- ciplinary procedures linked to debt financing. Using a sample over 20 years, Chintrakarn et al. (2014) report that the relation between CEO power and capital structure is non-mono- tonic and find that powerful CEOs avoid leverage while CEOs with weaker power do not evade leverage. This study advances that CEOs become self-serving at higher power levels, thereby leading to agency problems. Schopohl et al. (2021) report that female CFOs tend to take lower leverage when the CEO is less powerful, the board is more diverse, and when the CFOs are externally appointed.

10 Conclusion

This paper first comprehensively reviews the different proxies of CEO power used by empirical studies, and second, it reviews the consequences of CEO power on different cor- porate strategies. Our review shows that several studies have adopted the four categories of CEO power originally formulated by Finkelstein (1992). The review also indicates that the most popular measure of structural power is CEO-Chair duality. The two most popu- lar measures of ownership power are CEO stock ownership and CEO founder. CEO ten- ure is the most accepted indicator of expert power, and CEO outside directorship is the most prevalent measure of prestige power. Other common indicators of CEO power are CPS, board independence, CEO education, and CEO age. From the review of the prox- ies of CEO power, we recommend using all four types of CEO power and constructing a CEO power index either through CEO power dummies (Gunasekarage et al. 2020; Sheikh 2019a, 2019b; Muttakin et al. 2018; Haider and Fang 2018; Mollah and Liljeblom 2016; Ting 2013), or through principal component analysis (Altunbas et al. 2020; Veprauskaite and Adams 2013; Chikh & Filbien 2011) are the best approaches to measure CEO power rather than taking only one or two measures as adopted by some studies (Ahsan et al. 2022; Bebchuk et al. 2011; Chintrakarn et al. 2015; Colak and Liljeblom 2022; Korkeamäki et al. 2017; Usman et al. 2018).

Section 4 summarizes the research models used in relation to the research methodology, and Table 2 shows a detailed list of these studies. The summary of methodology reveals that numerous studies have not addressed the endogeneity issue. These studies could be identified in Tables 3, 4, 5, 6 under the methodology columns. Future research should ensure that robustness tests are conducted to eliminate endogeneity concerns.

The review of theories related to CEO power literature shows that only two or three studies have studied several theories reported in Panels B and C of Table 1, like the power circulation theory, life cycle theory, resource dependence theory, stewardship theory, and shareholder theory. Future research should address this dearth in literature by investigating CEO power on these theories.

The review also shows that the most common study on CEO power is its effect on firm performance, and it provides mixed evidence. Adams et al. (2005), Brahmana et al. (2021), Chiu et al. (2021), Fahlenbrach (2009), Harjoto and Jo (2009), Le et al. (2022), Li et al. (2018),

Tang (2021), Ting et al. (2017), Tien et al. (2013), Simsek (2007), Villalonga and Amit (2006), Zhang and Rajagopalan (2010) report that CEO power improves firm performance,

1136 S. Brahma, F. Economou

1 3

while Bebchuk et al. (2011), Colak and Liljeblom (2022), Cormier et al. (2016), Duru et al. (2016), Haynes et al. (2019), Park et al. (2018), Tien et al. (2013), Veprauskaite and Adams (2013) report that CEO power reduces firm performance. Most of these studies are on the US data, few from China, and only three studies from the European sample. Only one study by Mollah and Liljeblom (2016) has used multi-country data, but their sample analysis period is too short (2007–2011). Hence, future research should take a more comprehensive multi-country sample in an extended sample period to assess whether CEO power could influence firm performance.

The review of studies on CEO power and executive compensation is focused on the USA, Canada, and China, two have used the UK data, and one from South Africa. These studies also generated mixed results. Six studies (Abernethy et al. 2015; Al-Dhamari et al. 2022; Henderson et al. 2010; Hill et al. 2016; Luo 2015; Zhu et al. 2021) have incorporated the CEO power index to examine whether CEO power can explain executive compensa- tion. Moreover, the influence of CEO power on executive compensation in developed mar- kets in the post-financial crisis period is scant. We also find that empirical evidence is non- existent in continental European markets and other major emerging countries apart from China. Hence, another scope of future research is to address this gap.

Only a handful of studies examined CEO power and firm risk-taking, and more than seventy percent of these studies are based on the US data. Two of these studies are focused on US banking sector, and the data used is more than five years old. Since credit risk is a key element of bank operational risk, more research is needed in this area. In addition, there is no evidence of CEO power and firm risk-taking in other emerging markets apart from China. One study is on multi-country data, and this is based on large banks. So, more research is needed in this area.

The review of studies in Sect. 6 overall shows the consequence of CEO power on sev- eral different corporate strategies. However, further research is needed in most of these areas as the evidence is scant and inconclusive. So far, only three studies have examined whether CEO power has any bearing on audit committee effectiveness (Kim et al. 2017; Lisic et al. 2016; Al-Dhamari et al. 2022). Since CEOs are essential in determining board composition, more comprehensive evidence is needed on how CEO power shapes the func- tioning of audit committees. Few have examined whether CEO power could influence the hiring of new directors (Westphal and Zajac 1995), independent directors, and nomination of new CEOs (Baldenius et al. 2014; Zhang et al. 2011). The data used in these studies are more than ten years old, and none used the CEO power index by incorporating all four dimensions of CEO power. Future research must address this gap.

Only one study has investigated CEO power and board size (Dowell et al. 2011), and the data is from the nineties. So, more recent evidence on CEO power and board composition is warranted, particularly in the light of corporate governance reforms undertaken in sev- eral countries, like SOX. In a similar vein, only three studies examine whether CEO power can explain board gender diversity (Usman et al. 2018; Schopohl et al. 2021; Brodmann et al. 2022). Given the increasing number of corporate governance literature on board gen- der diversity, more research is needed. In addition, there is a growing focus on recogniz- ing LGBTQ employees’ supportive policies taken by businesses. Only one study (Brod- mann et al. 2021) has examined this. Hence another imperative line of inquiry would be to examine how CEO power could affect company LGBTQ-supportive policies, and this is a notable gap in research. These findings can also initiate policy debates and possible corporate governance reforms on channeling CEO power for positive corporate outcomes and strategies.

1137CEO power and corporate strategies: a review of the literature

1 3

Declarations

Conflict of interest There are no competing interests to declare.

Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Com- mons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.

References

Abebe MA, Angriawan A, Liu Y (2011) CEO power and organizational turnaround in declining firms: does environment play a role? J Leadersh Org Stud 18(2):260–273. https:// doi. org/ 10. 1177/ 15480 51810 385004

Abernethy MA, Kuang YF, Qin B (2015) The influence of CEO power on compensation contract design. Account Rev 90(4):1265–1306. https:// doi. org/ 10. 2308/ accr- 50971

Adams RB, Almeida H, Ferreira D (2005) Powerful CEOs and their impact on corporate performance. Rev Financ Stud 18(4):1403–1432. https:// doi. org/ 10. 1093/ rfs/ hhi030

Ahsan T, Al-Gamrh B, Mirza SS (2022) Corporate social responsibility and firm-value: the role of sensitive industries and CEOs power in China. Appl Econ 54(16):1844–1863. https:// doi. org/ 10. 1080/ 00036 846. 2021. 19831 36

Al- Shaer H, Albitar K, Liu J (2023) CEO power and CSR-linked compensation for corporate environmental responsibility: UK evidence. Rev Quant Finan Acc. https:// doi. org/ 10. 1007/ s11156- 022- 01118-z

Al-Dhamari R, Alquhaif AS, Al-Gamrh BA (2022) Modelling the impact of audit/remuneration committee overlap on debtholders’ perceptions of accounting information quality: the role of CEO power. Int J Financ Econ 27(3):2898–2920. https:// doi. org/ 10. 1002/ ijfe. 2304

Altunbaş Y, Thornton J, Uymaz Y (2020) The effect of CEO power on bank risk: do boards and institutional investors matter? Financ Res Lett 33:101202. https:// doi. org/ 10. 1016/j. frl. 2019. 05. 020

Anderson C, Galinsky AD (2006) Power, optimism, and risk-taking. Eu J Soc Psychol 36(4):511–536. https:// doi. org/ 10. 1002/ ejsp. 324

Baker TA, Lopez TJ, Reitenga AL, Ruch GW (2019) The influence of CEO and CFO power on accru- als and real earnings management. Rev Quant Financ Acc 52(1):325–345. https:// doi. org/ 10. 1007/ s11156- 018- 0711-z

Baldenius T, Melumad N, Meng X (2014) Board composition and CEO power. J Financ Econ 112(1):53– 68. https:// doi. org/ 10. 1016/j. jfine co. 2013. 10. 004

Balmaceda F (2009) Mergers and CEO power. J Inst Theor Econ 165(3):454–486 Bebchuk LA, Fried JM (2003) Executive compensation as an agency problem. J Econ Perspect 17(3):71–92.

https:// doi. org/ 10. 1257/ 08953 30037 69204 362 Bebchuk L, Cohen A, Ferrell A (2009) What matters in corporate governance? Rev Financ Stud 22(2):783–

827. https:// doi. org/ 10. 1093/ rfs/ hhn099 Bebchuk LA, Cremers KM, Peyer UC (2011) The CEO pay slice. J Financ Econ 102(1):199–221. https://

doi. org/ 10. 1016/j. jfine co. 2011. 05. 006 Bigley GA, Wiersema MF (2002) New CEOs and corporate strategic refocusing: how experience as heir

apparent influences the use of power. Admin Sci Quart 47(4):707–727. https:// doi. org/ 10. 2307/ 30949 14

Boyer R (2005) From shareholder value to CEO power: the paradox of the 1990s. Compet Change 9(1):7– 47. https:// doi. org/ 10. 1179/ 10245 2905X 38623

Brahmana RK, You HW, Yong XR (2021) Divestiture strategy, CEO power and firm performance. Manag Res Rev 44(3):418–436. https:// doi. org/ 10. 1108/ MRR- 04- 2020- 0196

Breuer W, Hass M, Rosenbach DJ (2022) The impact of CEO power and institutional discretion on CSR investment. Rev Financ Econ 40(1):20–43. https:// doi. org/ 10. 1002/ rfe. 1131

Bristy HJ, Han J, Tian GG (2022) CEO power and labor-friendly policy. Pac Basin Financ, J 71:101699. https:// doi. org/ 10. 1016/j. pacfin. 2021. 101699

http://creativecommons.org/licenses/by/4.0/

https://doi.org/10.1177/1548051810385004

https://doi.org/10.2308/accr-50971

https://doi.org/10.1093/rfs/hhi030

https://doi.org/10.1080/00036846.2021.1983136

https://doi.org/10.1007/s11156-022-01118-z

https://doi.org/10.1002/ijfe.2304

https://doi.org/10.1016/j.frl.2019.05.020

https://doi.org/10.1002/ejsp.324

https://doi.org/10.1007/s11156-018-0711-z

https://doi.org/10.1016/j.jfineco.2013.10.004

https://doi.org/10.1257/089533003769204362

https://doi.org/10.1093/rfs/hhn099

https://doi.org/10.1016/j.jfineco.2011.05.006

https://doi.org/10.2307/3094914

https://doi.org/10.1179/102452905X38623

https://doi.org/10.1108/MRR-04-2020-0196

https://doi.org/10.1002/rfe.1131

https://doi.org/10.1016/j.pacfin.2021.101699

1138 S. Brahma, F. Economou

1 3

Brodmann J, Hossain A, Al Masum A, Singhvi M (2021) Chief executive officer power and corporate sex- ual orientation equality. J Behav Exp Financ 31:100543. https:// doi. org/ 10. 1016/j. jbef. 2021. 100543

Brodmann J, Hossain A, Singhvi M (2022) Chief executive officer power and board gender diversity. Financ Res Lett 44:102099. https:// doi. org/ 10. 1016/j. frl. 2021. 102099

Bugeja M, Matolcsy Z, Spiropoulos H (2017) The CEO pay slice: managerial power or efficient contract- ing? Some indirect evidence. J Contemp Account Econ 13(1):69–87. https:// doi. org/ 10. 1016/j. jcae. 2017. 01. 003

Buyl T, Boone C, Hendriks W, Matthyssens P (2011) Top management team functional diversity and firm performance: the moderating role of CEO characteristics. J Manage Stud 48(1):151–177. https:// doi. org/ 10. 1111/j. 1467- 6486. 2010. 00932.x

Byun KAK, Al-Shammari M (2021) When narcissistic CEOs meet power: effects of CEO narcissism and power on the likelihood of product recalls in consumer-packaged goods. J Bus Res 128:45–60. https:// doi. org/ 10. 1016/j. jbusr es. 2021. 02. 001

Cannella AA Jr, Shen W (2001) So close and yet so far: promotion versus exit for CEO heirs apparent. Acad Manag J 4(2):252–270. https:// doi. org/ 10. 5465/ 30694 54

Chen HL (2014) Board capital, CEO power and R&D investment in electronics firms. Corp Gov Int Rev 22(5):422–436. https:// doi. org/ 10. 1111/ corg. 12076

Chikh S, Filbien JY (2011) Acquisitions and CEO power: evidence from French networks. J Corp Financ 17(5):1221–1236. https:// doi. org/ 10. 1016/j. jcorp fin. 2011. 06. 007

Chintrakarn P, Jiraporn P, Singh M (2014) Powerful CEOs and capital structure decisions: evidence from the CEO pay slice (CPS). Appl Econ Lett 21(8):564–568. https:// doi. org/ 10. 1080/ 13504 851. 2013. 875102

Chintrakarn P, Jiraporn P, Tong S (2015) How do powerful CEOs view corporate risk-taking? Evidence from the CEO pay slice (CPS). Appl Econ Lett 22(2):104–109. https:// doi. org/ 10. 1080/ 13504 851. 2014. 927565

Chintrakarn P, Chatjuthamard P, Tong S, Jiraporn P (2018) How do powerful CEOs view dividends and stock repurchases? Evidence from the CEO pay slice (CPS). Int Rev Econ Financ 58:49–64. https:// doi. org/ 10. 1016/j. iref. 2018. 02. 023

Chiu J, Chen CH, Cheng CC, Hung SC (2021) Knowledge capital, CEO power, and firm value: evidence from the IT industry. N Am J Econ Financ 55:101012. https:// doi. org/ 10. 1016/j. najef. 2019. 101012

Chiu J, Li YH, Kao TH (2022) Does organization capital matter? An analysis of the performance implica- tions of CEO power. N Am J Econ Financ 59:101382. https:// doi. org/ 10. 1016/j. najef. 2021. 101382

Choe C, Tian GY, Yin X (2014) CEO power and the structure of CEO pay. Int Rev Financ Anal 35:237– 248. https:// doi. org/ 10. 1016/j. irfa. 2014. 10. 004

Coff RW (2002) Human capital, shared expertise, and the likelihood of impasse in corporate acquisitions. J Manag 28:107–128. https:// doi. org/ 10. 1177/ 01492 06302 02800 107

Colak G, Liljeblom E (2022) Easy cleanups or forbearing improvements: the effect of CEO tenure on suc- cessor’s performance. J Financ Stab 63:101072. https:// doi. org/ 10. 1016/j. jfs. 2022. 101072

Coles JW, McWilliams VB, Sen N (2001) An examination of the relationship of governance mechanisms to performance. J Manag 27(1):23–50

Combs JG, Ketchen DJ Jr, Perryman AA, Donahue MS (2007) The moderating effect of CEO power on the board composition–firm performance relationship. J Manag Stud 44(8):1299–1323. https:// doi. org/ 10. 1111/j. 1467- 6486. 2007. 00708.x

Cormier D, Lapointe-Antunes P, Magnan M (2016) CEO power and CEO hubris: a prelude to financial mis- reporting? Manag Decis 54(2):522–554. https:// doi. org/ 10. 1108/ MD- 04- 2015- 0122

Cyert RM, Kang SH, Kumar P (2002) Corporate governance, takeovers, and top-management compensa- tion: theory and evidence. Manag Sci 48(4):453–469. https:// doi. org/ 10. 1287/ mnsc. 48.4. 453. 205

Daily CM, Johnson JL (1997) Sources of CEO power and firm financial performance: a longitudinal assess- ment. J Manag 23(2):97–117. https:// doi. org/ 10. 1016/ S0149- 2063(97) 90039-8

Daily CM, Dalton DR, Cannella AA (2003) Corporate governance: decades of dialogue and data. Acad Manag Rev 28:371–382. https:// doi. org/ 10. 5465/ amr. 2003. 10196 703

DeAngelo H, DeAngelo L, Stulz R (2006) Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory. J Financ Econ 81:227–254

DeBoskey DG, Luo Y, Zhou L (2019) CEO power, board oversight, and earnings announcement tone. Rev Quant Financ Acc 52(2):657–680. https:// doi. org/ 10. 1007/ s11156- 018- 0721-x

Donald CH (2007) Upper echelons theory: an update. Acad Manag Rev 32(2):334–343. https:// doi. org/ 10. 5465/ amr. 2007. 24345 254

Donaldson L, Davis JH (1991) Stewardship theory or agency theory: CEO governance and shareholder returns. Aust J Manag 16:49–64. https:// doi. org/ 10. 1177/ 03128 96291 016001

https://doi.org/10.1016/j.jbef.2021.100543

https://doi.org/10.1016/j.frl.2021.102099

https://doi.org/10.1016/j.jcae.2017.01.003

https://doi.org/10.1111/j.1467-6486.2010.00932.x

https://doi.org/10.1016/j.jbusres.2021.02.001

https://doi.org/10.5465/3069454

https://doi.org/10.1111/corg.12076

https://doi.org/10.1016/j.jcorpfin.2011.06.007

https://doi.org/10.1080/13504851.2013.875102

https://doi.org/10.1080/13504851.2014.927565

https://doi.org/10.1016/j.iref.2018.02.023

https://doi.org/10.1016/j.najef.2019.101012

https://doi.org/10.1016/j.najef.2021.101382

https://doi.org/10.1016/j.irfa.2014.10.004

https://doi.org/10.1177/014920630202800107

https://doi.org/10.1016/j.jfs.2022.101072

https://doi.org/10.1111/j.1467-6486.2007.00708.x

https://doi.org/10.1108/MD-04-2015-0122

https://doi.org/10.1287/mnsc.48.4.453.205

https://doi.org/10.1016/S0149-2063(97)90039-8

https://doi.org/10.5465/amr.2003.10196703

https://doi.org/10.1007/s11156-018-0721-x

https://doi.org/10.5465/amr.2007.24345254

https://doi.org/10.1177/0312896291016001

1139CEO power and corporate strategies: a review of the literature

1 3

Dowell GW, Shackell MB, Stuart NV (2011) Boards, CEOs, and surviving a financial crisis: evidence from the internet shakeout. Strateg Manag J 32(10):1025–1045. https:// doi. org/ 10. 1002/ smj. 923

Duru A, Iyengar RJ, Zampelli EM (2016) The dynamic relationship between CEO duality and firm perfor- mance: the moderating role of board independence. J Bus Res 69(10):4269–4277. https:// doi. org/ 10. 1016/j. jbusr es. 2016. 04. 001

Dutta S, MacAulay K, Saadi S (2011) CEO power, M&A decisions, and market reactions. J Multinatl Financ Manag 21(5):257–278. https:// doi. org/ 10. 1016/j. mulfin. 2011. 07. 003

Edelman LB (1992) Legal ambiguity and symbolic structures: organizational mediation of civil rights law. Am J Sociol 97:1531–1576

Elhagrasey GM, Harrison JR, Buchholz RA (1999) Power and pay: the politics of CEO compensation. J Manag Gov 2:309–332. https:// doi. org/ 10. 1023/A: 10099 75019 195

Fahlenbrach R (2009) Founder-CEOs, investment decisions, and stock market performance. J Financ Quant Anal 44(2):439–466. https:// doi. org/ 10. 1017/ S0022 10900 90901 39

Fama EF (1980) Agency problems and the theory of the firm. J Polit Econ 88:288–303 Fama EF, Jensen MC (1983) Separation of ownership and control. J Law Econ 262(2):301–325 Fang H, Lee JS, Chung CP, Lee YH, Wang WH (2020) Effect of CEO power and board strength on bank

performance in China. J Asian Econ 69:101215. https:// doi. org/ 10. 1016/j. asieco. 2020. 101215 Finkelstein S (1992) Power in top management teams: dimensions, measurement, and validation. Acad

Manag J 35(3):505–538. https:// doi. org/ 10. 5465/ 256485 Finkelstein S, D’aveni RA (1994) CEO duality as a double-edged sword: how boards of directors bal-

ance entrenchment avoidance and unity of command. Acad Manag J 37(5):1079–1108. https:// doi. org/ 10. 5465/ 256667

Fralich R, Papadopoulos A (2018) The financial crisis, acquisition premiums and the moderating effect of CEO power. Long Range Plann 51(2):204–218. https:// doi. org/ 10. 1016/j. lrp. 2017. 08. 004

Freeman RE, Evan WM (1990) Corporate governance: a stakeholder interpretation. J Behav Econ 19(4):337–359. https:// doi. org/ 10. 1016/ 0090- 5720(90) 90022-Y

Friedman M (1970) A friedman doctrine: the social responsibility of business is to increase its profits. N Y times Mag 13(1970):32–33

Graham JR, Kim H, Leary M (2020) CEO-board dynamics. J Financ Econ 137(3):612–636. https:// doi. org/ 10. 1016/j. jfine co. 2020. 04. 007

Greve HR, Mitsuhashi H (2007) Power and glory: concentrated power in top management teams. Organ Stud 28(8):1197–1221. https:// doi. org/ 10. 1177/ 01708 40607 075674

Gunasekarage A, Luong H, Truong TT (2020) Growth and market share matrix, CEO power, and firm performance. Pac Basin Financ J 59:101257. https:// doi. org/ 10. 1016/j. pacfin. 2019. 101257

Haider J, Fang HX (2018) CEO power, corporate risk taking and role of large shareholders. J Financ Econ Pol 10(1):55–72. https:// doi. org/ 10. 1108/ JFEP- 04- 2017- 0033

Hambrick DC, Mason PA (1984) Upper echelons: the organization as a reflection of its top managers. Acad Manag Rev 9(2):193–206

Han S, Nanda VK, Silveri S (2016) CEO power and firm performance under pressure. Financ Manag 45(2):369–400. https:// doi. org/ 10. 1111/ fima. 12127

Harjoto MA, Jo H (2009) CEO power and firm performance: a test of the life-cycle theory. Asia-Pac J Financ Stud 38(1):35–66. https:// doi. org/ 10. 1111/j. 2041- 6156. 2009. tb000 07.x

Harper J, Sun L (2019) CEO power and corporate social responsibility. Am J Bus 34(2):93–115. https:// doi. org/ 10. 1108/ AJB- 10- 2018- 0058

Harper J, Johnson G, Sun L (2020) Stock price crash risk and CEO power: firm-level analysis. Res Int Bus Financ 51:101094. https:// doi. org/ 10. 1016/j. ribaf. 2019. 101094

Haynes KT, Hillman A (2010) The effect of board capital and CEO power on strategic change. Strateg Manag J 31(11):1145–1163. https:// doi. org/ 10. 1002/ smj. 859

Haynes KT, Zattoni A, Boyd BK, Minichilli A (2019) Figureheads or potentates? CEO power and board oversight in the context of Sarbanes Oxley. Corp Gov Int Rev 27(6):402–426. https:// doi. org/ 10. 1111/ corg. 12293

Henderson BC, Masli A, Richardson VJ, Sanchez JM (2010) Layoffs and chief executive officer (CEO) compensation: does CEO power influence the relationship? J Account Audit Financ 25(4):709– 748. https:// doi. org/ 10. 1177/ 01485 58X10 02500 410

Hill MS, Lopez TJ, Reitenga AL (2016) CEO excess compensation: the impact of firm size and manage- rial power. Adv Acc 33:35–46. https:// doi. org/ 10. 1016/j. adiac. 2016. 04. 007

Horner SV, Valenti A (2012) CEO duality: balance of power and the decision to name a newly appointed CEO as chair. J Leadersh Account Ethics 9(3):53–74

Huang Z, Gao W (2022) The effects of formal and informal CEO power on debt policy persistence. N Am J Econ Financ 62:101748. https:// doi. org/ 10. 1016/j. najef. 2022. 101748

https://doi.org/10.1002/smj.923

https://doi.org/10.1016/j.jbusres.2016.04.001

https://doi.org/10.1016/j.mulfin.2011.07.003

https://doi.org/10.1023/A:1009975019195

https://doi.org/10.1017/S0022109009090139

https://doi.org/10.1016/j.asieco.2020.101215

https://doi.org/10.5465/256485

https://doi.org/10.5465/256667

https://doi.org/10.1016/j.lrp.2017.08.004

https://doi.org/10.1016/0090-5720(90)90022-Y

https://doi.org/10.1016/j.jfineco.2020.04.007

https://doi.org/10.1177/0170840607075674

https://doi.org/10.1016/j.pacfin.2019.101257

https://doi.org/10.1108/JFEP-04-2017-0033

https://doi.org/10.1111/fima.12127

https://doi.org/10.1111/j.2041-6156.2009.tb00007.x

https://doi.org/10.1108/AJB-10-2018-0058

https://doi.org/10.1016/j.ribaf.2019.101094

https://doi.org/10.1002/smj.859

https://doi.org/10.1111/corg.12293

https://doi.org/10.1177/0148558X1002500410

https://doi.org/10.1016/j.adiac.2016.04.007

https://doi.org/10.1016/j.najef.2022.101748

1140 S. Brahma, F. Economou

1 3

Jaroenjitrkam A, Yu CF, Zurbruegg R (2020) Does market power discipline CEO power? An agency per- spective. Eur Financ Manag 26(3):724–752. https:// doi. org/ 10. 1111/ eufm. 12240

Jensen MC, Meckling WH (1976) Theory of the firm: managerial behavior, agency costs and ownership structure. J Financ Econ 3(4):305–360. https:// doi. org/ 10. 1016/ 0304- 405X(76) 90026-X

Jia X, Liao S, Van der Heijden B, Li W (2022) Power and responsibility: how different sources of CEO power affect firms’ corporate social responsibility practices. Bus Eth Environ Responsib 31(3):682–701. https:// doi. org/ 10. 1111/ beer. 12438

Jiraporn P, Chintrakarn P, Liu Y (2012) Capital structure, CEO dominance, and corporate performance. J Financ Serv Res 42(3):139–158. https:// doi. org/ 10. 1007/ s10693- 011- 0109-8

Joseph J, Ocasio W, McDonnell MH (2014) The structural elaboration of board independence: executive power, institutional logics, and the adoption of CEO-only board structures in US corporate govern- ance. Acad Manag J 57(6):1834–1858. https:// doi. org/ 10. 5465/ amj. 2012. 0253

Joura E, Xiao Q, Ullah S (2022) The moderating effects of CEO power and personal traits on say‐on‐pay effectiveness: insights from the Anglo‐Saxon economies. Int J Financ Econ

Kahneman D, Tversky A (1979) Prospect theory: an analysis of decision under risk. Econometrica 47:263e291

Kalyta P (2009) Compensation transparency and managerial opportunism: a study of supplemental retire- ment plans. Strateg Manag J 30(4):405–423. https:// doi. org/ 10. 1002/ smj. 737

Kalyta P, Magnan M (2008) Executive pensions, disclosure quality, and rent extraction. J Account Public Pol 27(2):133–166. https:// doi. org/ 10. 1016/j. jaccp ubpol. 2008. 01. 002

Keltner D, Gruenfeld DH, Anderson C (2003) Power, approach, and inhibition. Psychol Rev 110(2):265. https:// doi. org/ 10. 1037/ 0033- 295X. 110.2. 265

Kim H, Kwak B, Lim Y, Yu J (2017) Audit committee accounting expertise, CEO power, and audit pricing. Asia-Pac J Account Econ 24(3–4):421–439. https:// doi. org/ 10. 1080/ 16081 625. 2015. 11057 53

Korkeamäki T, Liljeblom E, Pasternack D (2017) CEO power and matching leverage preferences. J Corp Financ 45:19–30. https:// doi. org/ 10. 1016/j. jcorp fin. 2017. 04. 007

Krause R, Filatotchev I, Bruton GD (2016) When in Rome, look like Caesar? Investigating the link between demand-side cultural power distance and CEO power. Acad Manag J 59(4):1361–1384. https:// doi. org/ 10. 5465/ amj. 2014. 0532

Le HTM, Kweh QL, Ting IWK, Nourani M (2022) CEO power and earnings management: dual roles of foreign shareholders in Vietnamese listed companies. Int J Financ Econ 27:1240–1256. https:// doi. org/ 10. 1002/ ijfe. 2211

Lewellyn KB, Fainshmidt S (2017) Effectiveness of CEO power bundles and discretion context: unpacking the ‘fuzziness’ of the CEO duality puzzle. Organ Stud 38(11):1603–1624. https:// doi. org/ 10. 1177/ 01708 40616 685364

Lewellyn KB, Muller-Kahle MI (2012) CEO power and risk taking: evidence from the subprime lending industry. Corp Gov Int Rev 20(3):289–307. https:// doi. org/ 10. 1111/j. 1467- 8683. 2011. 00903.x

Li F (2016) Endogeneity in CEO power: a survey and experiment. Invest Anal J 45(3):149–162. https:// doi. org/ 10. 1080/ 10293 523. 2016. 11519 85

Li F, Li T, Minor D (2016) CEO power, corporate social responsibility, and firm value: a test of agency theory. Int J Manag Financ 12(5):611–628. https:// doi. org/ 10. 1108/ IJMF- 05- 2015- 0116

Li Y, Gong M, Zhang XY, Koh L (2018) The impact of environmental, social, and governance disclosure on firm value: the role of CEO power. Brit Account Rev 50(1):60–75. https:// doi. org/ 10. 1016/j. bar. 2017. 09. 007

Lisic LL, Neal TL, Zhang IX, Zhang Y (2016) CEO power, internal control quality, and audit committee effectiveness in substance versus in form. Contemp Account Res 33(3):1199–1237. https:// doi. org/ 10. 1111/ 1911- 3846. 12177

Liu Y, Jiraporn P (2010) The effect of CEO power on bond ratings and yields. J Empir Financ 17(4):744– 762. https:// doi. org/ 10. 1016/j. jempfi n. 2010. 03. 003

Lo HC, Shiah-Hou SR (2022) The effect of CEO power on overinvestment. Rev Quant Financ Acc 59:1–41. https:// doi. org/ 10. 1007/ s11156- 022- 01060-0

Luo Y (2015) CEO power, ownership structure and pay performance in Chinese banking. J Econ Bus 82:3– 16. https:// doi. org/ 10. 1016/j. jecon bus. 2015. 04. 003

Maswadi L, Amran A (2023) Does board capital enhance corporate social responsibility disclosure quality? The role of CEO power. Corp Soc Responsib Environ Manag 30(1):209–225. https:// doi. org/ 10. 1002/ csr. 2349

Menla Ali F, Wu Y, Zhang X (2023) ESG disclosure, CEO power and incentives and corporate risk-taking. Eur Financ Manag. https:// doi. org/ 10. 1111/ eufm. 12447

Merkl-Davies DM, Brennan NM (2007) Discretionary disclosure strategies in corporate narratives: incre- mental information or impression management? J Account Lit 27(1):116–196

https://doi.org/10.1111/eufm.12240

https://doi.org/10.1016/0304-405X(76)90026-X

https://doi.org/10.1111/beer.12438

https://doi.org/10.1007/s10693-011-0109-8

https://doi.org/10.5465/amj.2012.0253

https://doi.org/10.1002/smj.737

https://doi.org/10.1016/j.jaccpubpol.2008.01.002

https://doi.org/10.1037/0033-295X.110.2.265

https://doi.org/10.1080/16081625.2015.1105753

https://doi.org/10.1016/j.jcorpfin.2017.04.007

https://doi.org/10.5465/amj.2014.0532

https://doi.org/10.1002/ijfe.2211

https://doi.org/10.1177/0170840616685364

https://doi.org/10.1111/j.1467-8683.2011.00903.x

https://doi.org/10.1080/10293523.2016.1151985

https://doi.org/10.1108/IJMF-05-2015-0116

https://doi.org/10.1016/j.bar.2017.09.007

https://doi.org/10.1111/1911-3846.12177

https://doi.org/10.1016/j.jempfin.2010.03.003

https://doi.org/10.1007/s11156-022-01060-0

https://doi.org/10.1016/j.jeconbus.2015.04.003

https://doi.org/10.1002/csr.2349

https://doi.org/10.1111/eufm.12447

1141CEO power and corporate strategies: a review of the literature

1 3

Miller D (1991) Stale in the saddle: CEO tenure and the match between organization and environment. Manag Sci 37(1):34–52. https:// doi. org/ 10. 1287/ mnsc. 37.1. 34

Mollah S, Liljeblom E (2016) Governance and bank characteristics in the credit and sovereign debt crises– the impact of CEO power. J Financ Stab 27:59–73. https:// doi. org/ 10. 1016/j. jfs. 2016. 09. 003

Morck R, Shleifer A, Vishny RW (1988) Management ownership and market valuation: an empirical analy- sis. J Financ Econ 20:293–315. https:// doi. org/ 10. 1016/ 0304- 405X(88) 90048-7

Muttakin MB, Khan A, Mihret DG (2018) The effect of board capital and CEO power on corporate social responsibility disclosures. J Bus Ethics 150(1):41–56. https:// doi. org/ 10. 1007/ s10551- 016- 3105-y

Naaman C, Sun L (2022) CEO power and R&D investment. Account Res J 35(2):160–177. https:// doi. org/ 10. 1108/ ARJ- 07- 2020- 0195

Ntim CG, Lindop S, Thomas DA, Abdou H, Opong KK (2019) Executive pay and performance: the moderating effect of CEO power and governance structure. Int J Hum Res Man 30(6):921–963. https:// doi. org/ 10. 1080/ 09585 192. 2017. 12825 32

Onali E, Galiakhmetova R, Molyneux P, Torluccio G (2016) CEO power, government monitoring, and bank dividends. J Financ Intermed 27:89–117. https:// doi. org/ 10. 1016/j. jfi. 2015. 08. 001

Park JH, Kim C, Chang YK, Lee DH, Sung YD (2018) CEO hubris and firm performance: exploring the moderating roles of CEO power and board vigilance. J Bus Ethics 147(4):919–933. https:// doi. org/ 10. 1007/ s10551- 015- 2997-2

Pathan S (2009) Strong boards, CEO power and bank risk-taking. J Bank Financ 33(7):1340–1350. https:// doi. org/ 10. 1016/j. jbank fin. 2009. 02. 001

Pfeffer J, Salancik GR (1978) The external control of organizations: a resource dependence perspective. Stanford University Press, Stanford University Press

Pollock TG, Fischer HM, Wade JB (2002) The role of power and politics in the repricing of executive options. Acad Manag J 45(6):1172–1182. https:// doi. org/ 10. 5465/ 30694 32

Pour EK, Uddin M, Murinde V, Amini S (2023) CEO power, bank risk-taking and national culture: international evidence. J Financ Stab. https:// doi. org/ 10. 1016/j. jfs. 2023. 101133

Pucheta-Martínez MC, Gallego-Álvarez I (2021) The role of CEO power on CSR reporting: the moder- ating effect of linking CEO compensation to shareholder return. Sustainability 13(6):3197. https:// doi. org/ 10. 3390/ su130 63197

Ryan HE Jr, Wiggins RA III (2004) Who is in whose pocket? Director compensation, board independ- ence, and barriers to effective monitoring. J Financ Econ 73(3):497–524. https:// doi. org/ 10. 1016/j. jfine co. 2003. 11. 002

Saiyed AA, Tatoglu E, Ali S, Dutta DK (2023) Entrepreneurial orientation, CEO power and firm perfor- mance: an upper echelons theory perspective. Manag Decis 61(6):1773–1797. https:// doi. org/ 10. 1108/ MD- 05- 2022- 0641

Saleh MW, Eleyan D, Maigoshi ZS (2022) Moderating effect of CEO power on institutional ownership and performance. EuroMed J Bus. https:// doi. org/ 10. 1108/ EMJB- 12- 2021- 0193

Sanders WG, Carpenter MA (1998) Internationalization and firm governance: the roles of CEO compen- sation, top team composition, and board structure. Acad Manag J 41(2):158–178. https:// doi. org/ 10. 5465/ 257100

Sariol AM, Abebe MA (2017) The influence of CEO power on explorative and exploitative organiza- tional innovation. J Bus Res 73:38–45. https:// doi. org/ 10. 1016/j. jbusr es. 2016. 11. 016

Schopohl L, Urquhart A, Zhang H (2021) Female CFOs, leverage and the moderating role of board diversity and CEO power. J Corp Financ 71:101858. https:// doi. org/ 10. 1016/j. jcorp fin. 2020. 101858

Shabir M, Jiang P, Shahab Y, Wang P (2023) Geopolitical, economic uncertainty and bank risk: do CEO power and board strength matter? Int Rev Financ Anal 87:102603. https:// doi. org/ 10. 1016/j. irfa. 2023. 102603

Shahab Y, Ntim CG, Ullah F, Yugang C, Ye Z (2020) CEO power and stock price crash risk in China: do female directors’ critical mass and ownership structure matter? Int Rev Financ Anal 68:101457. https:// doi. org/ 10. 1016/j. irfa. 2020. 101457

Shahab Y, Gull AA, Ahsan T, Mushtaq R (2022) CEO power and corporate social responsibility decou- pling. Appl Econ Lett 29(21):1965–1969. https:// doi. org/ 10. 1080/ 13504 851. 2021. 19663 68

Sheikh S (2018a) The impact of market competition on the relation between CEO power and firm inno- vation. J Multinatl Financ Manag 44:36–50. https:// doi. org/ 10. 1016/j. mulfin. 2018. 01. 003

Sheikh S (2018b) CEO power, product market competition and firm value. Res Int Bus Financ 46:373– 386. https:// doi. org/ 10. 1016/j. ribaf. 2018. 04. 009

Sheikh S (2019a) An examination of the dimensions of CEO power and corporate social responsibility. Rev Acc Financ 18(2):221–244. https:// doi. org/ 10. 1108/ RAF- 01- 2018- 0034

https://doi.org/10.1287/mnsc.37.1.34

https://doi.org/10.1016/j.jfs.2016.09.003

https://doi.org/10.1016/0304-405X(88)90048-7

https://doi.org/10.1007/s10551-016-3105-y

https://doi.org/10.1108/ARJ-07-2020-0195

https://doi.org/10.1080/09585192.2017.1282532

https://doi.org/10.1016/j.jfi.2015.08.001

https://doi.org/10.1007/s10551-015-2997-2

https://doi.org/10.1016/j.jbankfin.2009.02.001

https://doi.org/10.5465/3069432

https://doi.org/10.1016/j.jfs.2023.101133

https://doi.org/10.3390/su13063197

https://doi.org/10.1016/j.jfineco.2003.11.002

https://doi.org/10.1108/MD-05-2022-0641

https://doi.org/10.1108/EMJB-12-2021-0193

https://doi.org/10.5465/257100

https://doi.org/10.1016/j.jbusres.2016.11.016

https://doi.org/10.1016/j.jcorpfin.2020.101858

https://doi.org/10.1016/j.irfa.2023.102603

https://doi.org/10.1016/j.irfa.2020.101457

https://doi.org/10.1080/13504851.2021.1966368

https://doi.org/10.1016/j.mulfin.2018.01.003

https://doi.org/10.1016/j.ribaf.2018.04.009

https://doi.org/10.1108/RAF-01-2018-0034

1142 S. Brahma, F. Economou

1 3

Sheikh S (2019b) CEO power and corporate risk: the impact of market competition and corporate gov- ernance. Corp Gov: Int Rev 27(5):358–377. https:// doi. org/ 10. 1111/ corg. 12285

Sheikh S (2022) CEO power and the likelihood of paying dividends: effect of profitability and cash flow volatility. J Corp Financ 73:102186. https:// doi. org/ 10. 1016/j. jcorp fin. 2022. 102186

Shen W, Cannella AA Jr (2002) Power dynamics within top management and their impacts on CEO dismissal followed by inside succession. Acad Manag J 45(6):1195–1206. https:// doi. org/ 10. 5465/ 30694 34

Shleifer A, Vishny RW (1989) Management entrenchment: the case of manager-specific investments. J Financ Econ 25(1):123–139. https:// doi. org/ 10. 1016/ 0304- 405X(89) 90099-8

Shui X, Zhang M, Smart P, Ye F (2022) Sustainable corporate governance for environmental innovation: a configurational analysis on board capital, CEO power and ownership structure. J Bus Res 149:786– 794. https:// doi. org/ 10. 1016/j. jbusr es. 2022. 05. 037

Simsek Z (2007) CEO tenure and organizational performance: an intervening model. Strateg Manag J 28(6):653–662. https:// doi. org/ 10. 1002/ smj. 599

Sun L, Skousen CJ (2022) CEO power and discontinued operations. Adv Account 58:100613. https:// doi. org/ 10. 1016/j. adiac. 2022. 100613

Sun L, Johnson G, Bradley W (2022) CEO power and annual report reading difficulty. J Contemp Account Econ 18(2):100315100315. https:// doi. org/ 10. 1016/j. jcae. 2022. 100315

Tan M, Liu B (2016) CEO’s managerial power, board committee memberships and idiosyncratic volatility. Int Rev Financ Anal 48:21–30. https:// doi. org/ 10. 1016/j. irfa. 2016. 09. 003

Tang J (2021) CEO self-discipline in power use: a key moderator for the effect of CEO power. Eur Manag J 39(5):633–644. https:// doi. org/ 10. 1016/j. emj. 2021. 01. 007

Tang J, Crossan M (2017) Are dominant CEOs the saviors of troubled firms? Long Range Plann 50(6):782– 793. https:// doi. org/ 10. 1016/j. lrp. 2016. 03. 002

Tang J, Crossan M, Rowe WG (2011) Dominant CEO, deviant strategy, and extreme performance: the moderating role of a powerful board. J Manag Stud 48(7):1479–1503. https:// doi. org/ 10. 1111/j. 1467- 6486. 2010. 00985.x

Tian GY, Yang F (2014) CEO incentive compensation in US financial institutions. Int Rev Financ Anal 34:64–75. https:// doi. org/ 10. 1016/j. irfa. 2014. 05. 008

Tien C, Chen CN, Chuang CM (2013) A study of CEO power, pay structure, and firm performance. J Manag Organ 19(4):424–453. https:// doi. org/ 10. 1017/ jmo. 2013. 30

Ting HI (2013) CEO turnover and shareholder wealth: evidence from CEO power in Taiwan. J Bus Res 66(12):2466–2472. https:// doi. org/ 10. 1016/j. jbusr es. 2013. 05. 036

Ting HI, Chueh H, Chang PR (2017) CEO power and its effect on performance and governance: evidence from Chinese banks. Emerg Mark Rev 33:42–61. https:// doi. org/ 10. 1016/j. ememar. 2017. 09. 005

Turner JC, Hogg MA, Oakes PJ, Reicher SD, Wetherell MS (1987) Rediscovering the social group: a self- categorization theory. Basil Blackwell, Oxford

Tuwey JK, Tarus DK (2016) Does CEO power moderate the relationship between board leadership and strategy involvement in private firms? Evidence from Kenya. Corp Gov 16(5):906–922. https:// doi. org/ 10. 1108/ CG- 01- 2016- 0010

Urban D (2019) The effects of culture on CEO power: evidence from executive turnover. J Bank Financ 104:50–69. https:// doi. org/ 10. 1016/j. jbank fin. 2019. 05. 003

Usman M, Zhang J, Farooq MU, Makki MAM, Dong N (2018) Female directors and CEO power. Econ Lett 165:44–47. https:// doi. org/ 10. 1016/j. econl et. 2018. 01. 030

Veprauskaitė E, Adams M (2013) Do powerful chief executives influence the financial performance of UK firms? Brit Account Rev 45(3):229–241. https:// doi. org/ 10. 1016/j. bar. 2013. 06. 004

Villalonga B, Amit R (2006) How do family ownership, control and management affect firm value? J Financ Econ 80(2): 385–417. https:// doi. org/ 10. 1016/j. jfine co. 2004. 12. 005

Walls JL, Berrone P (2017) The power of one to make a difference: how informal and formal CEO power affect environmental sustainability. J Bus Ethics 145(2):293–308. https:// doi. org/ 10. 1007/ s10551- 015- 2902-z

Westphal JD, Zajac EJ (1995) Who shall govern? CEO/board power, demographic similarity, and new direc- tor selection. Adm Sci Q 40(1):60–83. https:// doi. org/ 10. 2307/ 23937 00

Wei Q (2021) CEO power and nonprofit financial performance: Evidence from Chinese philanthropic foun- dations. Voluntas 32:460–476. https:// doi. org/ 10. 1007/ s11266- 019- 00187-4

Wheelen TL, Hunger JD (1990) Cases in strategic management, vol 1. Addison Wesley Publishing Com- pany, Boston

Zagonov M, Salganik-Shoshan G (2018) CEO Pay Slice as a measure of CEO dominance. Res Int Bus Financ 45:571–576. https:// doi. org/ 10. 1016/j. ribaf. 2017. 07. 092

https://doi.org/10.1111/corg.12285

https://doi.org/10.1016/j.jcorpfin.2022.102186

https://doi.org/10.5465/3069434

https://doi.org/10.1016/0304-405X(89)90099-8

https://doi.org/10.1016/j.jbusres.2022.05.037

https://doi.org/10.1002/smj.599

https://doi.org/10.1016/j.adiac.2022.100613

https://doi.org/10.1016/j.jcae.2022.100315

https://doi.org/10.1016/j.irfa.2016.09.003

https://doi.org/10.1016/j.emj.2021.01.007

https://doi.org/10.1016/j.lrp.2016.03.002

https://doi.org/10.1111/j.1467-6486.2010.00985.x

https://doi.org/10.1016/j.irfa.2014.05.008

https://doi.org/10.1017/jmo.2013.30

https://doi.org/10.1016/j.jbusres.2013.05.036

https://doi.org/10.1016/j.ememar.2017.09.005

https://doi.org/10.1108/CG-01-2016-0010

https://doi.org/10.1016/j.jbankfin.2019.05.003

https://doi.org/10.1016/j.econlet.2018.01.030

https://doi.org/10.1016/j.bar.2013.06.004

https://doi.org/10.1016/j.jfineco.2004.12.005

https://doi.org/10.1007/s10551-015-2902-z

https://doi.org/10.2307/2393700

https://doi.org/10.1007/s11266-019-00187-4

https://doi.org/10.1016/j.ribaf.2017.07.092

1143CEO power and corporate strategies: a review of the literature

1 3

Zajac EJ, Westphal JD (1996b) Director reputation, ceo/board power, and the dynamics of board interlocks. In: Academy of management proceedings, vol 1996, No 1, pp 254–258. Briarcliff Manor, NY 10510: Academy of Management

Zajac EJ, Westphal JD (1996a) Who shall succeed? How CEO/board preferences and power affect the choice of new CEOs. Acad Manag J 39(1):64–90. https:// doi. org/ 10. 5465/ 256631

Zhang Y, Rajagopalan N (2010) Once an outsider, always an outsider? CEO origin, strategic change, and firm performance. Strateg Manag J 31(3):334–346. https:// doi. org/ 10. 1002/ smj. 812

Zhang L, Ji W, Tao J, Wang Q (2011) Who shall leave? How CEO preference and power affect executive turnover in Chinese listed companies. Corp Gov Int Rev 19(6):547–561. https:// doi. org/ 10. 1111/j. 1467- 8683. 2011. 00855.x

Zhang Y, Li J, Deng Y, Zheng Y (2022) Avoid or approach: How CEO power affects corporate environmen- tal innovation. J Innov Knowl 7(4):100250. https:// doi. org/ 10. 1016/j. jik. 2022. 100250

Zhao Y, Elahi E, Khalid Z, Sun X, Sun F (2023) Environmental, social and governance performance: analy- sis of CEO power and corporate risk. Sustainability 15(2):1471. https:// doi. org/ 10. 3390/ su150 21471

Zhou Y, Zhu H, Yang J, Zou Y (2021) Does CEO power backfire? The impact of CEO power on corporate strategic change. Sustainability 13(16):8847. https:// doi. org/ 10. 3390/ su131 68847

Zhu J, Gao J, Tan H (2021) How the CEO power and age dissimilarity shape the chair-CEO pay gap: empir- ical evidence from China. North Am J Econ and Financ 55:101221. https:// doi. org/ 10. 1016/j. najef. 2020. 101221

Zou H, Qi G, Xie X, Ma H (2021) The effects of formal and informal CEO power on firm risk in China: the mediating role of corporate social responsibility. Asia Pac Bus Rev 27(5):749–775. https:// doi. org/ 10. 1080/ 13602 381. 2020. 18432 43

Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

https://doi.org/10.5465/256631

https://doi.org/10.1002/smj.812

https://doi.org/10.1111/j.1467-8683.2011.00855.x

https://doi.org/10.1016/j.jik.2022.100250

https://doi.org/10.3390/su15021471

https://doi.org/10.3390/su13168847

https://doi.org/10.1016/j.najef.2020.101221

https://doi.org/10.1080/13602381.2020.1843243

(the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.