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

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

Abstract

We examine the connection between firm performance and a CEO's previous position (inside or outside the firm), using Covid-19 as an exogenous shock. Firms led by insider CEOs outperformed those led by outsider CEOs in terms of return on assets during the Covid-19 crisis period in 2020, but there was no performance differential in the period before the crisis. Additional tests indicate that outperformance under insider CEOs is observed in firms holding more cash and firms with a higher proportion of internally promoted non-CEO executives. These findings have important implications for boards of directors making CEO appointments.

Suggested Citation

  • Haque, Md Reiazul & Choi, Bobae & Lee, Doowon & Wright, Sue, 2022. "Insider vs. outsider CEO and firm performance: Evidence from the Covid-19 pandemic," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s154461232100547x
    DOI: 10.1016/j.frl.2021.102609
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    References listed on IDEAS

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    Cited by:

    1. Maximilian Weis & Patricia Klarner, 2022. "A CEO’s Future Temporal Depth and Organizational Resilience," Schmalenbach Journal of Business Research, Springer, vol. 74(4), pages 659-693, December.
    2. Chundakkadan, Radeef & Sasidharan, Subash, 2023. "The role of government support on E-commerce and firm innovation during pandemic crisis," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 904-913.

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    More about this item

    Keywords

    Insider CEO; Outsider CEO; Firm performance; Covid-19;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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