Does CEO reputation matter for capital investments?

被引：87

作者：

Jian, Ming ^{[1
]}

Lee, Kin Wai ^{[1
]}

机构：

[1] Nanyang Technol Univ, Nanyang Business Sch, Singapore 639798, Singapore

来源：

JOURNAL OF CORPORATE FINANCE | 2011年 / 17卷 / 04期

关键词：

CEO reputation; Agency costs; Capital expenditure; FREE CASH FLOW; STOCK-MARKET REACTION; EXPENDITURE ANNOUNCEMENTS; AGENCY PROBLEMS; CORPORATE DIVERSIFICATION; OPERATING PERFORMANCE; FIRM; DECISIONS; MANAGEMENT; OPPORTUNITIES;

D O I：

10.1016/j.jcorpfin.2011.04.004

中图分类号：

F8 [财政、金融];

学科分类号：

0202 ;

摘要：

This paper examines the association between CEO reputation and corporate capital investments. The efficient contracting hypothesis predicts a positive association between CEO reputation and wealth effects of corporate capital investments. In contrast, the rent extraction hypothesis predicts that the wealth effects of capital investments are negatively associated with CEO reputation. We find that the stock market's responses to announcements of capital investments are more favorable for firms with more reputable CEOs. Moreover, CEO reputation mitigates the negative stock price reaction associated with announcements of capital investments by firms with high free cash flow and low growth opportunities. Additional analysis indicates that firms with more reputable CEOs exhibit significantly better post-investment operating performance improvements than those with less reputable CEOs, especially in firms with high free cash flow and low growth opportunities. Collectively, our results suggest that the efficient contracting hypothesis dominates the rent extraction hypothesis in terms of net economic impact of capital investments on the investing firm. (C) 2011 Elsevier B.V. All rights reserved.

引用

页码：929 / 946

页数：18

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