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Do Japanese CEOs matter?

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

Abstract

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.

Suggested Citation

  • Ahn, Sanghoon & Bhattacharya, Utpal & Jung, Taehun & Nam, Giseok, 2009. "Do Japanese CEOs matter?," Pacific-Basin Finance Journal, Elsevier, vol. 17(5), pages 628-650, November.
  • Handle: RePEc:eee:pacfin:v:17:y:2009:i:5:p:628-650
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    Cited by:

    1. Demirtas, Gul & Simsir, Serif Aziz, 2016. "The effect of CEO departure on target firms’ post-takeover performance: Evidence from not-delisting target firms," Finance Research Letters, Elsevier, vol. 16(C), pages 55-65.
    2. Chang, Yuk Ying & Faff, Robert & Hwang, Chuan-Yang, 2010. "Liquidity and stock returns in Japan: New evidence," Pacific-Basin Finance Journal, Elsevier, vol. 18(1), pages 90-115, January.
    3. repec:hit:hcfrwp:2 is not listed on IDEAS
    4. Hadem, Michael, 2010. "Bedingungen und Konsequenzen des Wechsels von Finanzvorständen - Eine Analyse in großen börsennotierten Unternehmen," EconStor Theses, ZBW - German National Library of Economics, number 43681.
    5. Nakano, Makoto & Nguyen, Pascal, 2012. "Board size and corporate risk-taking: Further evidence from Japan," MPRA Paper 38990, University Library of Munich, Germany.

    More about this item

    Keywords

    Corporate governance CEO turnover Japanese firms;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • F30 - International Economics - - International Finance - - - General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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