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CEO Behavior and Firm Performance

Author

Listed:
  • Oriana Bandiera
  • Andrea Prat
  • Stephen Hansen
  • Raffaella Sadun

Abstract

We develop a new method to measure CEO behavior in large samples via a survey that collects high-frequency, high-dimensional diary data and a machine learning algorithm that estimates behavioral types. Applying this method to 1,114 CEOs in six countries reveals two types: “leaders,” who do multifunction, high-level meetings, and “managers,” who do individual meetings with core functions. Firms that hire leaders perform better, and it takes three years for a new CEO to make a difference. Structural estimates indicate that productivity differentials are due to mismatches rather than to leaders being better for all firms.

Suggested Citation

  • Oriana Bandiera & Andrea Prat & Stephen Hansen & Raffaella Sadun, 2020. "CEO Behavior and Firm Performance," Journal of Political Economy, University of Chicago Press, vol. 128(4), pages 1325-1369.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/705331
    DOI: 10.1086/705331
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    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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