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The Impact of CEO Power on Financial Performance of the Company

Student: Liuaza Zharashueva

Supervisor: Anastasia N. Stepanova

Faculty: Faculty of Economic Sciences

Educational Programme: Strategic Corporate Finance (Master)

Year of Graduation: 2020

In this study, we investigate the impact of CEO Power on firm performance using panel data fixed effects model. The sample consists of a panel of 759 US companies from the S&P 1500 index over the period 2015-2019. In this paper, we investigate three dimensions of CEP Power, namely ownership, structural and expert dimensions. We found that overall impact of CEO Power dimensions on performance differs in companies of different sizes, and also depends on the performance measurement: accounting or market indicator. We found that the structural dimension of Power negatively affects the firm's accounting performance only in large companies. The expert dimension of Power positively affects the firm's accounting performance in large companies, as well as market performance indicator in small, medium and large companies. We also found that when there is a structural Power, CEOs make R&D investments more effective. We contribute to the literature with a new evidence for the relationship between CEO Power and firm performance in terms of firm size and R&D investments.

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