CEO Behavior and Firm Performance

Oriana Bandiera, Stephen Hansen, Andrea Prat, Raffaella Sadun

NBER Working Paper No. 23248
Issued in March 2017, Revised in September 2017
NBER Program(s):Productivity, Innovation, and Entrepreneurship

We measure the behavior of 1,114 CEOs in six countries parsing granular CEO diary data through an unsupervised machine learning algorithm. The algorithm uncovers two distinct behavioral types: “leaders” and “managers”. Leaders focus on multi-function, high-level meetings, while managers focus on one-to-one meetings with core functions. Firms with leader CEOs are on average more productive, and this difference arises only after the CEO is hired. The data is consistent with horizontal differentiation of CEO behavioral types, and firm-CEO matching frictions. We estimate that 17% of sample CEOs are mismatched, and that mismatches are associated with significant productivity losses.

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Document Object Identifier (DOI): 10.3386/w23248

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