Founder-CEOs and Stock Market Performance
BibTeX
@MISC{Fahlenbrach_founder-ceosand,
author = {Rüdiger Fahlenbrach and Günter Strobl and Geoffrey Tate and Gratefully Acknowledged},
title = {Founder-CEOs and Stock Market Performance},
year = {}
}
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Abstract
I thank Nicholas Chang, Jen Dlugosz, Ashton Hawk, Allison Eleven percent of the largest public U.S. firms are headed by the CEO who founded the firm. Founder-CEO firms differ systematically from successor-CEO firms. They have a higher accounting performance and a higher firm valuation. Founder-CEO firms invest more in R&D, have higher capital expenditures, and make more focused mergers and acquisitions. Moreover, an equal-weighted investment strategy that had invested in founder-CEO firms from 1993–2002 would have earned a benchmarkadjusted return of 8.3 % annually. A value-weighted investment strategy would have earned an abnormal return of 10.7%. The excess return is robust; after controlling for a wide variety of firm characteristics, CEO characteristics, and industry affiliation, the abnormal return is still 4.4 % annually.
