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Busy CEOs and the performance of family firms

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  • Pandey, Rakesh
  • Vithessonthi, Chaiporn
  • Mansi, Mansi

Abstract

We provide evidence on the link between busyness of CEOs and/or chairmen and the performance of family firms in India. We show that the level of CEO busyness has a negative effect on firm performance, measured by Tobin's q. That is, the frequency of the CEO attending board meetings is positively associated with Tobin's q. We also find that the effect of CEO busyness on firm performance is not different between family firms with a family-member CEO/chairman and family firms with a non-family-member CEO/chairman. Our findings show that the effect of CEO busyness on Tobin's q is negative for small firms, and that the effect of chairman busyness on Tobin's q is negative for large firms. While the CEO/chairman busyness is not associated with Tobin's q in the low Tobin's q sample, it has a negative effect on Tobin's q in the high Tobin's q sample, implying that firms with better growth opportunities should be managed by less busy CEOs.

Suggested Citation

  • Pandey, Rakesh & Vithessonthi, Chaiporn & Mansi, Mansi, 2015. "Busy CEOs and the performance of family firms," Research in International Business and Finance, Elsevier, vol. 33(C), pages 144-166.
    • Handle: RePEc:eee:riibaf:v:33:y:2015:i:c:p:144-166
    DOI: 10.1016/j.ribaf.2014.09.005
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    5. Franco Ernesto Rubino & Paolo Tenuta & Domenico Rocco Cambrea, 2017. "Board characteristics effects on performance in family and non-family business: a multi-theoretical approach," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(3), pages 623-658, September.
    6. Waldkirch, Matthias, 2020. "Non-family CEOs in family firms: Spotting gaps and challenging assumptions for a future research agenda," Journal of Family Business Strategy, Elsevier, vol. 11(1).
    7. Ferris, Stephen P. & Jayaraman, Narayanan & Liao, Min-Yu (Stella), 2020. "Better directors or distracted directors? An international analysis of busy boards," Global Finance Journal, Elsevier, vol. 44(C).
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    More about this item

    Keywords

    CEO busyness; Corporate governance; Family ownership; Family firm; Firm performance; India;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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