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CEO power and labor productivity

Author

Listed:
  • Emily Breit
  • Xuehu (Jason) Song
  • Li Sun
  • Joseph Zhang

Abstract

Purpose - This paper aims to examine how Chief Executive Officer (CEO) power affects firm-level labor productivity. Design/methodology/approach - The authors rely on regression analysis to examine the relation between CEO power and labor productivity. Findings - Following prior research (i.e. the sequential rank order tournament theory), the authors predict that powerful CEOs lead to high labor productivity. They find a significant and positive relationship between CEO power and labor productivity. They further decompose labor productivity into labor efficiency and labor cost components and find a positive (negative) relationship between CEO power and labor efficiency (cost) component, suggesting that more powerful CEOs better manage labor efficiency and control labor cost. The results are also robust to various additional tests. Originality/value - This study contributes to two streams of research: the CEO power literature in finance and the labor productivity and cost literature in accounting. To the best of the authors’ knowledge, it is the first study that performs a direct empirical test on the relation between CEO power and labor productivity.

Suggested Citation

  • Emily Breit & Xuehu (Jason) Song & Li Sun & Joseph Zhang, 2019. "CEO power and labor productivity," Accounting Research Journal, Emerald Group Publishing Limited, vol. 32(2), pages 148-165, July.
    • Handle: RePEc:eme:arjpps:arj-05-2016-0056
    DOI: 10.1108/ARJ-05-2016-0056
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    Cited by:

    1. Jongmoo Jay Choi & Ming Ju & Jose M. Plehn-Dujowich & Xiaotian Tina Zhang, 2022. "Outsourcing as a cooperative game between the CEO and labor: theory and evidence," Review of Quantitative Finance and Accounting, Springer, vol. 59(3), pages 1095-1131, October.

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