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Competing with Superstars

Author

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  • Ammann, Manuel
  • Horsch, Philipp
  • Oesch, David

Abstract

This paper investigates the effect of superstar CEOs on their competitors. Exploiting shocks to CEO status due to prestigious media awards, we document a significant positive stock market performance of competitors of superstar CEOs subsequent to the award. The effect is more pronounced for competitors who have not received an award themselves, who are geographically close to an award winner and who are not entrenched. We observe an increase in risk-taking, operating performance and innovation activity of superstars’ competitors as potential channels for this positive performance. Our results suggest a positive overall welfare impact of corporate superstar systems due to the incentivizing effect on superstars’ competitors.

Suggested Citation

  • Ammann, Manuel & Horsch, Philipp & Oesch, David, 2015. "Competing with Superstars," Working Papers on Finance 1510, University of St. Gallen, School of Finance, revised Jan 2016.
    • Handle: RePEc:usg:sfwpfi:2015:10
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    Cited by:

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    2. David, Thomas & Di Giuli, Alberta & Romec, Arthur, 2023. "CEO reputation and shareholder voting," Journal of Corporate Finance, Elsevier, vol. 83(C).
    3. Enzo Brox & Daniel Goller, 2024. "Tournaments, Contestant Heterogeneity and Performance," Papers 2401.05210, arXiv.org, revised Oct 2024.
    4. Tu Nguyen & Jing Zhao, 2021. "Industry tournament incentives and corporate innovation," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(9-10), pages 1797-1845, October.
    5. Matthias Neuenkirch & Peter Tillmann, 2016. "Does A Good Central Banker Make A Difference?," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1541-1560, July.
    6. Amore, Mario Daniele & Schwenen, Sebastian, 2020. "The Value of Luck in the Labor Market for CEOs," CEPR Discussion Papers 14839, C.E.P.R. Discussion Papers.
    7. Deutscher, Christian & Neuberg, Lena & Thiem, Stefan, 2023. "Who’s afraid of the GOATs? - Shadow effects of tennis superstars," Journal of Economic Psychology, Elsevier, vol. 99(C).
    8. Joon Mahn Lee & Jung Chul Park & Guoli Chen, 2023. "A cognitive perspective on real options investment: CEO overconfidence," Strategic Management Journal, Wiley Blackwell, vol. 44(4), pages 1084-1110, April.
    9. Pham, Mia Hang & Merkoulova, Yulia & Veld, Chris, 2024. "Award-winning CEOs and corporate innovation," Journal of Banking & Finance, Elsevier, vol. 159(C).
    10. Christopher Kurzhals & Lorenz Graf‐Vlachy & Andreas König, 2020. "Strategic leadership and technological innovation: A comprehensive review and research agenda," Corporate Governance: An International Review, Wiley Blackwell, vol. 28(6), pages 437-464, November.
    11. Plaksina, Yulia & Gallagher, Liam & Dowling, Michael, 2019. "CEO social status and M&A decision making," International Review of Financial Analysis, Elsevier, vol. 64(C), pages 282-300.
    12. Silu Cheng, 2023. "Are superstar directors effective in corporate social responsibility performance? An empirical analysis of sustainable development goals," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 487-503, March.
    13. Lindsay Baran & Silu Cheng, 2024. "Director awards and board effectiveness," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 41-73, March.
    14. Brian L. Connelly & Qiang (John) Li & Wei Shi & Kang‐Bok Lee, 2020. "CEO dismissal: Consequences for the strategic risk taking of competitor CEOs," Strategic Management Journal, Wiley Blackwell, vol. 41(11), pages 2092-2125, November.

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    More about this item

    Keywords

    Competition; Firm performance; Risk-taking; Innovation; Awards; CEO;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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