CEO power and corporate strategies: a review of the literature

Sanjukta Brahma*, Fotini Economou

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
56 Downloads (Pure)

Abstract

In recent years, the impact of chief executive officers (CEOs) power on corporate strategies has attracted significant public debate in the academic milieu. In this study, we comprehensively review the academic literature on CEO power in relation to different corporate policies. We conduct a comprehensive review by dividing the literature into four streams: CEO power and firm performance, CEO power and executive compensation, CEO power and firm risk-taking, and finally, CEO power on other corporate strategies. Our review shows that the findings are mixed in relation to the effects of CEO power on firm strategies. Overall, the negative impact of CEO power on firm performance is attributed to agency theory, where CEOs pursue their own vested interests, thereby leading to weak corporate governance. The review reveals that the positive impact of CEO power on corporate outcomes is due to effective board monitoring, a powerful board, and high market competition. Our study also shows that most of the studies have adopted Finkelstein’s (1992) four sources of CEO power but have taken different proxies to measure these powers. We have also identified several gaps in the current studies and recommend avenues for further research.
Original languageEnglish
Pages (from-to)1069-1143
Number of pages75
JournalReview of Quantitative Finance and Accounting
Volume62
Early online date11 Dec 2023
DOIs
Publication statusPublished - Apr 2024

Keywords

  • CEO power
  • firm performance
  • firm risk-taking
  • executive compensation
  • corporate governance
  • Corporate governance
  • Firm performance
  • Firm risk-taking
  • Executive compensation

ASJC Scopus subject areas

  • Accounting
  • General Business,Management and Accounting
  • Finance

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