Abstract
The CEO's reputation is a valuable intangible resource for a firm. This study investigates the effect of a CEO's reputation on corporate governance efficiency. Using a sample of 3504 Chinese listed companies from 2002 to 2018, we find that the CEO's reputation built through corporate donations reduces the probability of their forced turnover. This effect is stronger when a firm/CEO has more media exposure and weaker when a firm's peer companies donate more. The mechanism of this effect is that the CEO's reputation is a valuable resource that makes it difficult for firms to find a substitute in a short time; therefore, firing a CEO who has a high reputation is costly to a firm, and reputable CEOs are likely to become entrenched. Our study demonstrates a new perspective on the CEO's reputation by explaining the failure of corporate governance and provides practical insights for constraining managers and promoting the management efficiency of enterprises.
DOI
10.1016/j.econmod.2021.105640
Publication Date
2021-11-01
Publication Title
Economic Modelling
Volume
104
Publisher
Elsevier
ISSN
0264-9993
Embargo Period
2024-11-19
Recommended Citation
Yang, G., Huang, R., Shi, Y., & Jia, Z. (2021) 'Does a CEO's private reputation impede corporate governance?', Economic Modelling, 104. Elsevier: Available at: https://doi.org/10.1016/j.econmod.2021.105640
