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Knowledge capital, CEO power, and firm value: Evidence from the IT industry

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  • Chiu, Junmao
  • Chen, Chin-Ho
  • Cheng, Chung-Chieh
  • Hung, Shih-Chang

Abstract

Disruptive innovation dramatically changes the demand of a product market in the information technology (IT) industry. In response to the impact of disruptive innovation, IT firms that may be eliminated from the competitive race actively develop innovative products and adjust their operating strategies to strengthen their survivability in the fiercely competitive market. Thus, this study explores the factors that affect firm value in the IT industry under the impact of disruptive innovation. The empirical results reveal that knowledge capital and CEO power play crucial roles in explaining firm value. IT firms with powerful CEOs and increased knowledge capital have high firm values. The effects of knowledge capital and CEO power on firm value are especially significant for founder and duality CEO firms. Furthermore, the influence of CEO power is more prominent in periods of financial crisis.

Suggested Citation

  • Chiu, Junmao & Chen, Chin-Ho & Cheng, Chung-Chieh & Hung, Shih-Chang, 2021. "Knowledge capital, CEO power, and firm value: Evidence from the IT industry," The North American Journal of Economics and Finance, Elsevier, vol. 55(C).
    • Handle: RePEc:eee:ecofin:v:55:y:2021:i:c:s1062940818306776
    DOI: 10.1016/j.najef.2019.101012
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    Cited by:

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    2. Alam, Ahmed W. & Farjana, Ashupta & Houston, Reza, 2024. "Geopolitical risk, CEO power, and corporate lobbying: Do powerful CEOs lobby more?," Finance Research Letters, Elsevier, vol. 62(PA).
    3. Chaeho Chase Lee & Erdal Atukeren & Hohyun Kim, 2024. "Knowledge Capital and Stock Returns during Crises in the Manufacturing Sector: Moderating Role of Market Share, Tobin’s Q, and Cash Holdings," Risks, MDPI, vol. 12(6), pages 1-23, June.
    4. Majeed, Muhammad Ansar & Xie, Shilei & Ullah, Irfan & Fu, Jianru & Wang, Chunlin, 2023. "Do powerful CEOs affect qualitative financial disclosure? Evidence from accounting comparability," Research in International Business and Finance, Elsevier, vol. 66(C).
    5. Oleg Sergeevich Sukharev, 2023. "Intellectual Firm: Key Features and Development Models," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1091-1119, June.

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