Finance Seminar（2014-11）

Topic:CEOs and the Product Market: When are Powerful CEOs Beneficial?

Speaker:Minwen Li, Tsinghua University

Time:Thursday, 24 April, 10:00-11:30

Location:Room 217, Guanghua Building 2

Abstract：We examine whether CEO power combines with the product market environment to differentially impact firm value. We find that in more competitive, high demand product markets that are changing rapidly, CEO power has a positive impact on the value of the firm as measured by Tobin’s q. Examining the sources of CEO power, we find that appointments of CFOs and CTOs and board members to key committees during the CEO’s tenure have a positive impact on Tobin’s q in highly fluid and competitive product market environments. Our findings imply that the product market plays an important role in affecting the benefits and costs of CEO power.