The CEO Effect on Firm Performance: An Excerpt from the Strategic Management Journal

Excerpt from Strategic Management Journal. See original here. 

“Do CEOs matter very much? We have developed a refined technique for addressing this centrally important question. By more completely disentangling contextual and CEO influences on company performance, we have shown that the CEO effect is appreciably greater than is obtained with customary techniques; with our new CEO in Context, or CiC, technique, about 38 percent of variance in ROA can be attributed to CEOs. Our technique also generates appreciably different insights about the influence and efficacy of many individual CEOs, perhaps most notably those whose performance differs dramatically from what they inherited and whose influence endures beyond their tenures—in short, the most impactful CEOs.”

Hambrick, Donald C., and Timothy J. Quigley. “Toward More Accurate Contextualization of the CEO Effect on Firm Performance.” Strategic Management Journal, vol. 35, no. 4, 17 May 2013, pp. 473–491., https://doi.org/10.1002/smj.2108.