University of Twente Student Theses

Login

CEO power and firm performance : the moderating role of board independence.

Wal, N.A. van der (2020) CEO power and firm performance : the moderating role of board independence.

This is the latest version of this item.

[img] PDF
2MB
Abstract:In this study, the effect of CEO power on firm performance is examined as well as the moderating role of independent directors. CEO power is defined by the compensation, ownership, founder status, duality, and tenure of the firm its CEOs. Based on a sample of 142 UK listed firms for a sample period of 2013 to 2018, OLS regression analysis is conducted. Literature has indicated that independent directors seems to have an impact on the effect of CEO power on firm performance. Therefore, this study also examines the moderating role of independent directors on the effect of CEO power and firm performance. The results show a significantly positive relationship between CEO power and market-based firm performance Tobin’s Q. In addition, this study finds a moderating impact of independent directors on the relationship between CEO power and Tobin’s Q. A higher proportion of independent directors weakens the effect of CEO power on Tobin’s Q, when CEO power is based on CEO compensation. Another result shows that a higher proportion of independent directors strengthens the effect of CEO power on Tobin’s Q, only when CEO power is based on ownership, founder status, duality, and tenure. These results highly depend on how firm performance is measured, the proportion of independent directors, and the amount of debt. However, these results are not robust for stock return. Further research is needed to assess the validity and generalizability of these results. This study contributes to the existing literature because of the scarce research that has been conducted about this topic in UK context.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:https://purl.utwente.nl/essays/80937
Export this item as:BibTeX
EndNote
HTML Citation
Reference Manager

 

Repository Staff Only: item control page