What question did this study set out to answer?

To investigate whether the strategic alignment between CEO skill sets and corporate business strategy explains variations in firm performance and risk.

April 7, 2020Journal of Asian Finance Economics and BusinessOpen Access

Does the Fit of Managerial Ability with Firm Strategy Matters on Firm Performance

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Authors

TCTeng Yuan ChengNanjing Audit University YLYue-Qi LIJilin University YLYu‐En LinJilin University of Finance and Economics

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Implication

Panel study reveals aligning CEO managerial skills with corporate strategy drives firm performance and risk in U.S. public firms, highlighting the importance of strategic executive hiring.

Key Points

To investigate whether the strategic alignment between CEO skill sets and corporate business strategy explains variations in firm performance and risk.
Analyzed 34,285 CEO-firm-year panel data observations from U.S. publicly traded firms spanning 1992 to 2014 using BoardEx and Execucomp databases.
Categorized corporate business models into Prospector and Defender types using a discrete STRATEGY composite measure.
Quantified executive skill profiles by analyzing career histories to construct an index of generalist versus specialist managerial ability.
Generalist CEOs matched with Prospector strategies generated improved firm performance, but this pairing also elevated firm risk.
Specialist CEOs achieved significantly stronger firm performance when managing Defender organizations.

Cite This Study

Cheng et al. (2020) studied this question.

synapsesocial.com/papers/69dbf5135b363cdf1c836455 https://doi.org/10.13106/jafeb.2020.vol7.no4.9

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Implication

Panel study reveals aligning CEO managerial skills with corporate strategy drives firm performance and risk in U.S. public firms, highlighting the importance of strategic executive hiring.

Does the Fit of Managerial Ability with Firm Strategy Matters on Firm Performance

Discussion

Member takes

Implication

Key Points

Cite This Study

Does the Fit of Managerial Ability with Firm Strategy Matters on Firm Performance

Discussion

Member takes

Implication

Key Points

Cite This Study

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