Darvishan, Majid
(2020)
CEO-Firm Matches: Evidence from Competition Shocks.
Doctoral Dissertation, University of Pittsburgh.
(Unpublished)
Abstract
Competition shocks fundamentally alter the nature of a firm's strategy; an increase (decrease) in competition shifts firms’ focus from long-term growth (short-term performance) to short-term performance (long-term growth). Using major decreases and increases of import tariffs as quasi-natural experiments, this paper documents a non-monotonic relationship between competition and the probability of CEO turnover. Based on CEOs’ prior experience, I construct two indices of skills: 1) skills that are suitable for high-competition and short-term performance, and 2) skills that are desirable for low-competition and long-term growth. I find that firms are more likely to retain a CEO or appoint a candidate with high-competition (low-competition) skills following a tariff cut (increase). Using family firms as instruments for the quality of CEO-firm matches, I find that firms run by CEOs with relevant skills outperform those run by CEOs who lack those skills. Because turnovers are costly, firms change their CEOs if the benefits of a CEO with relevant skills outweigh the costs. I examine whether firms that retain their CEOs alternatively change their compensation plan to motivate CEOs to deliver appropriate strategies. I find that financial conditions and CEO power prevent firms from implementing compensation schemes that promote optimal strategies following competition shocks.
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Details
| Item Type: |
University of Pittsburgh ETD
|
| Status: |
Unpublished |
| Creators/Authors: |
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| ETD Committee: |
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| Date: |
9 July 2020 |
| Date Type: |
Publication |
| Defense Date: |
4 June 2020 |
| Approval Date: |
9 July 2020 |
| Submission Date: |
8 June 2020 |
| Access Restriction: |
2 year -- Restrict access to University of Pittsburgh for a period of 2 years. |
| Number of Pages: |
124 |
| Institution: |
University of Pittsburgh |
| Schools and Programs: |
Joseph M. Katz Graduate School of Business > Business Administration |
| Degree: |
PhD - Doctor of Philosophy |
| Thesis Type: |
Doctoral Dissertation |
| Refereed: |
Yes |
| Uncontrolled Keywords: |
CEO-Firm Match, CEO Turnover, CEO Compensation |
| Date Deposited: |
09 Jul 2020 23:09 |
| Last Modified: |
09 Jul 2022 05:15 |
| URI: |
http://d-scholarship.pitt.edu/id/eprint/39211 |
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