The effects of culture on CEO power: Evidence from executive turnover

Daniel Urban

Journal of Banking & Finance, 2019, vol. 104, issue C, 50-69

Abstract: In this paper, I show that CEO power, which arises from differences in national culture, can weaken a firm’s governance. Based on a hand-collected dataset with more than 5000 forced and voluntary CEO transitions across 37 countries, I find that CEOs are less likely to be dismissed for bad performance in more hierarchical countries. The results are robust to alternative measures of hierarchy, a large battery of control variables, subsample analysis, placebo tests, and different empirical methodologies. Stronger hierarchies also allow for idiosyncratic managerial styles around exogenous turnover events of CEOs. Overall, the results suggest that the power and importance of CEOs vary across countries.

Keywords: Corporate governance; CEOs; Turnover; Culture; Agency problems; Managerial entrenchment (search for similar items in EconPapers)
JEL-codes: G34 G38 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:104:y:2019:i:c:p:50-69

DOI: 10.1016/j.jbankfin.2019.05.003

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