influence.
Standard agency models acknowledge that managers may have discretion inside their firm, which they can use to alter corporate decisions, and in effect performance, to advance their own objectives. However, these models do not generally imply that corporate behavior will vary with individual managers, as they typically do not focus on characteristic differences across managers.
Examining leadership's significance for corporate performance, this research study seeks to explore some of the idiosyncratic differences amongst some of today’s most influential CEOs. Three CEO characteristics will be explored in this study: educational pedigree, financial performance compensation incentives, and marital status.
Data explored in this study is to consist of Standard & Poors (S&P) 500 companies with CEOs having tenure of at least the last three fiscal years. Corporate performance will be assessed in two ways, using the compound annual growth rate (CAGR) and Tobin’s Q. These two metrics reflect investors’ evaluations of the prospects of the company. Tobin’s Q reflects the evaluation by the market of all of the information about a company available to investors, and as such, is a better measure of performance than profit-based indexes such as return on assets, which are more easily manipulated by managers. To control for potential bias, control variables in this study to be collected will include: gender, industry classification, tenure, and age.
Given the central problems of this study, to examine which of the three independent variables under study have a statistically significant impact on corporate performance, a generalized least squares (GLS) regression will be modeled and analyzed. It is expected that there will be a statistically significant impact.
This study will add to the rich literature on the importance of management educational pedigree on firm performance. The exploration of this via creating a dummy variable to explore six classifications vs. just two (ivy or non-ivy league) is a new approach. Study of financial performance compensation incentives on corporate performance using Tobin’s Q for assessment extends the work of other studies. Finally; grounded in behavioral finance theory, assessment of the role of CEO social status on firm performance is a relatively new line of research.