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Does a CEO's private reputation impede corporate governance?

Author

Listed:
  • Yang, Guang
  • Huang, Ruixian
  • Shi, Yukun
  • Jia, Zhehao

Abstract

The CEO's reputation is a valuable intangible resource for a firm. This study investigates the effect of a CEO's reputation on corporate governance efficiency. Using a sample of 3504 Chinese listed companies from 2002 to 2018, we find that the CEO's reputation built through corporate donations reduces the probability of their forced turnover. This effect is stronger when a firm/CEO has more media exposure and weaker when a firm's peer companies donate more. The mechanism of this effect is that the CEO's reputation is a valuable resource that makes it difficult for firms to find a substitute in a short time; therefore, firing a CEO who has a high reputation is costly to a firm, and reputable CEOs are likely to become entrenched. Our study demonstrates a new perspective on the CEO's reputation by explaining the failure of corporate governance and provides practical insights for constraining managers and promoting the management efficiency of enterprises.

Suggested Citation

  • Yang, Guang & Huang, Ruixian & Shi, Yukun & Jia, Zhehao, 2021. "Does a CEO's private reputation impede corporate governance?," Economic Modelling, Elsevier, vol. 104(C).
    • Handle: RePEc:eee:ecmode:v:104:y:2021:i:c:s0264999321002297
    DOI: 10.1016/j.econmod.2021.105640
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    More about this item

    Keywords

    CEO private Reputation; Corporate donation; CEO forced Turnover; Media exposure;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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