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Do Japanese CEOs matter?

  • Ahn, Sanghoon
  • Bhattacharya, Utpal
  • Jung, Taehun
  • Nam, Giseok

In a country where individualism is emphasized less than in Western countries, we ask whether the CEO (shacho) of a Japanese corporation positively affects firm performance. To answer this question, we construct a shacho-firm matched panel data set in the period 1990 through 2002 of all listed 1419 Japanese manufacturing firms and their 3520 shachos. Though we find a positive abnormal stock return on the date a shacho change is announced, especially when the shacho change is non-routine, we document that this effect is short-lived. There seems to be no long-run positive change in performance or policies after a shacho change, even when the shacho change is non-routine. Finally, in trying to explain firm performance or policies, we attempt to separate a firm-fixed effect from a shacho-fixed effect, and are unable to disentangle a shacho-fixed effect. We are thus left to conclude that shachos do not positively matter in the Japanese corporation in this decade of a stagnant economy.

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Article provided by Elsevier in its journal Pacific-Basin Finance Journal.

Volume (Year): 17 (2009)
Issue (Month): 5 (November)
Pages: 628-650

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Handle: RePEc:eee:pacfin:v:17:y:2009:i:5:p:628-650
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