Characteristics of CEOs Affect the Effectiveness of Companies at Different Stages of the Life Cycle of Organizations

Abstract This paper analyses the effect of CEO characteristics on financial performance of the firm on the basis of 121 listed firms in retail industry in Western Europe for the years 2012-2020. Before proceeding to analysis, the sample was divided with respect to Life Cycles of the organizations. CEO characteristics were measured by Tenure, Duality, Experience in the industry, CEO Busyness, Form of Appointment of CEO and Education. The regression analysis is done with the use of Random Effect model with further extension to GMM model in order to account for dynamic nature of panel. This research takes into account effect on both market-based and accounting-based indicators of financial performance. The paper also supports hypothesis with robustness check with a use of Ordered Logistic Regression. We have found non-linear relationship of CEO tenure and Firm’s financial performance for Growth and Mature stages. Education level turned to have negative effect on financial performance for the whole sample, as well as for individual stages. This paper also provides insights on specific LCO characteristics which are significant during only certain stage.