CEO Behavior and Firm Performance

58 Pages Posted: 20 Mar 2017

See all articles by Oriana Bandiera

Oriana Bandiera

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Stephen Hansen

University of Oxford - Department of Economics

Andrea Prat

Columbia Business School - Finance and Economics; Centre for Economic Policy Research (CEPR)

Raffaella Sadun

Harvard University - Strategy Unit; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2017

Abstract

We measure the behavior of 1,114 CEOs in six countries parsing granular CEO diary data through an unsupervised machine learning algorithm. The algorithm uncovers two distinct behavioral types: “leaders” and “managers”. Leaders focus on multi-function, high-level meetings, while managers focus on one-to-one meetings with core functions. Firms with leader CEOs are on average more productive, and this difference arises only after the CEO is hired. The data is consistent with horizontal differentiation of CEO behavioral types, and firm-CEO matching frictions. We estimate that 17% of sample CEOs are mismatched, and that mismatches are associated with significant productivity losses.

Suggested Citation

Bandiera, Oriana and Hansen, Stephen and Prat, Andrea and Sadun, Raffaella, CEO Behavior and Firm Performance (March 2017). NBER Working Paper No. w23248, Available at SSRN: https://ssrn.com/abstract=2937518

Oriana Bandiera (Contact Author)

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) ( email )

Houghton Street
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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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Stephen Hansen

University of Oxford - Department of Economics ( email )

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Andrea Prat

Columbia Business School - Finance and Economics ( email )

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Centre for Economic Policy Research (CEPR)

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United Kingdom

Raffaella Sadun

Harvard University - Strategy Unit ( email )

Harvard Business School
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United States

HOME PAGE: http://people.hbs.edu/rsadun

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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HOME PAGE: http://cep.lse.ac.uk/_new/staff/person.asp?id=1758

National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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