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Impact of CEO Industry-Specific vs. General Managerial Experience on Firm Performance, Risk-Taking Behavior and CEO Compensation
This paper investigates the impact of CEO cross-industry and specific-industry experience on firm performance, risk-taking behavior, and CEO compensation. Using hand-collected data for a large cross-section of CEOs over 1992-2017, we find that CEOs with cross-industry experience are not likely to help improve firm performance, tend to invest less on R&D, and are likely to receive pay premium. On the other hand, we document a nonmonotonic relation between CEOs’ specific-industry experience and firm performance as well as R&D. Particularly, CEOs’ specific-industry experience leads to higher firm performance and R&D investments until it reaches a certain threshold, especially among high growth firms. This paper contributes to the literature that examines the impact of CEO characteristics on firm performance and other firm outcomes by documenting the effect of cross-industry and specific-industry experience on these outcome variables.
Naym, Junnatun, "Impact of CEO Industry-Specific vs. General Managerial Experience on Firm Performance, Risk-Taking Behavior and CEO Compensation" (2019). Student Honors Theses and MBA Research Papers. 1.
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