CEO age and organic growth among European firms

Giorgio Barba Navaretti (), Davide Castellani and Fabio Pieri

No 2019/13, DEM Working Papers from Department of Economics and Management

Abstract: We examine the relation between the age of CEOs and firm organic growth. In a large sample of mostly privately held European manufacturing firms with more than 10 employees, we find that firms managed by a young CEO grow faster in terms of both sales and assets. Our results are robust to the inclusion of a large vector of firm and CEO characteristics and to controls for endogeneity, survival bias and time horizon. We submit that this relation is explained by an incentive of young CEOs to boost firm growth in order both to signal their talent in the market for managers and to get a longer stream of future compensation benefits. In turn, this may create an agency problem, due to a divergence of this corporate strategy from shareholders’ targets. Consistently, we find that a concentrated ownership, allowing a more effective monitoring, moderates the negative relation between CEO age and firm organic growth.

Keywords: Chief Executive Officer; CEO age; organic growth; agency theory; European manufacturing firms (search for similar items in EconPapers)
JEL-codes: G32 G34 L25 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-hrm and nep-sbm
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:trn:utwprg:2019/13

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